Question: Problem 1 ( 1 4 points ) Suppose you need to decide how much capacity to produce in the face of uncertain demand. Assume that
Problem points Suppose you need to decide how much capacity to produce in the face of uncertain demand. Assume that it costs $ to build each unit of capacity and each unit of lost sales due to insufficient capacity costs $ The demand profile is as follows: Demand Probability What is the expected demand? points Assume your objective is to minimize the total cost built capacitylost sales How much capacity should you build? Round to the nearest whole number. Hint: for each possible capacitydemand pair, lost sales is maxDemandCapacity. Then determine expected loss sales for each possible capacity points For the capacity determined above, what is the expected utilization and probability of idle capacity? points
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