Open the Investment Decisions.zip located on the book web site. The file contains more details on the model. This is a firm that has five plants around the country and is facing tremendous growth. They have an opportunity to invest in additional capacity and also replace older equipment with much faster equipment. In this case, the investment decisions can be thought of as a step-function of fixed costs. That is, they can add blocks of capacity at a time for a fixed cost.

a. What year will they run out of capacity with their existing network?

b. In Year 5, what is the optimal plan? How would you describe the solution?

c. In Year 5, what other alternative scenarios should they consider?