You are upgrading your smartphone and need to update your plan. The flat rates f

Question

You are upgrading your smartphone and need to update your plan. The flat rates for the plan are listed below. Amounts over the maximum allowable gigabytes (GB) for each plan are charged $15 per GB, fractional amounts included. You estimated that with the phones new features you will use 10 GB, which does not align directly with any plan.

Plan Base Price Max # of GB

A $60 5GB

B $85 7GB

C $140 12GB

D $150 15GB

If you use 10 GB of data which plan should you choose?

At what level of usage should you upgrade from Plan B to Plan C?

At what Level of usage should you upgrade from Plan C to Plan D?

Summarize the decision rules for choosing each plan.

Explanation / Answer

Amswer :

Plan Base Price Max # of GB

A $60 5GB

B $85 7GB

C $140 12GB

D $150 15GB

Answer :

For usage of 10 GB of data, the Plan B should be choosed along with individual purchase of 3 GBs @ $15/GB = $45.

Plan B gives 7GB for $ 85 and additional purchase of 3GB for $45 = we get 10GB for $130 ($85+$45=$130)

So this option is better than Plan C option, because Plan C given 12Gb for $140, but we only need 10GB , so by using above option , we could save $10 per month.

Answer : At usage of 11GB, we will shift from plan B to plan C, because Plan C gives 12GB for $140, which is lower than Plan B and additional purchase of 4GB which will be equal to $145. saving $5 per month and getting one more GB per month. ( (11GB will cost $145 if we use Plan B (7GB =$85) & additional purchase of 4GB=$60)

Answer : At 13GB usage , we will upgrade from Plan C to Plan D, becaus eit is cheaper option, than using Plan C and additional purchase @ $15 /GB. Because 12GB with single additional GB purchase will cost for $155 which is higher than the cost of plan D.

Decision Rule is lowest possible cost investment for the mobile data usage with optimum usage of given conditions. Exploring the given options along with the additonal purchase of GB with given plan and rates.  

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