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Question: at a small but growing airport the local airline company...

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At a small but growing airport, the local airline company is purchasing a new tractor for a tractor- trailer train to bring luggage to and from the airplanes. A new mechanized luggage system will be installed in 3 years, so the tractor will not be needed after that. However, because it will receive heavy use, so that the running and maintenance costs will increase rapidly as the tractor ages, it may still be more economical to replace the tractor after 1 or 2 years. The following table gives the net discounted costs associated with purchasing the tractor at the end of year i (purchasing prices minus trade-in allowance, plus running and maintenance costs), and trading it at the end of year j (where year 0 is now). 3. 2 3 0 $8,000 $18,000 $31,000 $10,000 $21,000 $12,000 2 (a) Formulate a network model to determine at what times (if any) the tractor should be replaced to minimize the total cost for the tractors over 3 years, and (b) Find the optimal solution.
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