Compare the following machines on the basis of their present worth. Use 12% per year. Machine A Machine B First cost 44,000 23,0000 Annual operating cost 7,000 9,000 Annual repair cost 210 350 Overhaul every 2 years 1,900 Overhaul every 5 years 2,500 Salvage value 4,000 3,000

Compare the following machines on the basis of their present worth. Use 12% per year. Machine A Machine B First cost 44,000 23,0000 Annual operating cost 7,000 9,000 Annual repair cost 210 350 Overhaul every 2 years 1,900 Overhaul every 5 years 2,500 Salvage value 4,000 3,000

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 33P: Assume the demand for a companys drug Wozac during the current year is 50,000, and assume demand...

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It costs a pharmaceutical company 75,000 to produce a 1000-pound batch of a drug. The average yield from a batch is unknown but the best case is 90% yield (that is, 900 pounds of good drug will be produced), the most likely case is 85% yield, and the worst case is 70% yield. The annual demand for the drug is unknown, with the best case being 20,000 pounds, the most likely case 17,500 pounds, and the worst case 10,000 pounds. The drug sells for 125 per pound and leftover amounts of the drug can be sold for 30 per pound. To maximize annual expected profit, how many batches of the drug should the company produce? You can assume that it will produce the batches only once, before demand for the drug is known.
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