Lindsay owns a parking lot with 100 spaces in downtown Portland. She can offer an
"early bird" special for $12/day. She knows that she can attract as many business people as
parking spots that she is willing to allocate at this low daily rate. If she doesn’t offer a space for
an "early bird" special, she can rent the space to a day user who will pay $6/hour. On average,
each space will be utilized for 3.5 hours per day.
Here is a historical tally on how many parking spaces she has had occupied by day users at the
hourly rate:
Parking spaces Probability
65 0.15
70 0.20
75 0.25
80 0.30
85 0.10
How many spaces should Lindsay allocate to the early-birds to maximize her revenue?