Demand is forecasted using the following regression equation: D = 100 + 15(t) where “t” is a specified future time period. The current time period is 0 (t=0). The machines used to make this product have a capacity of 50 units/time period. The company currently has 4 machines yielding a total capacity of 200 units/time period. Due to technology changes, the current equipment will become obsolete at the end of period 15. If a new machine costs $2000, and the net revenue earned per unit is $10, how many machines should be added between today (t=0) and the end of period 15?

Demand is forecasted using the following regression equation: D = 100 + 15(t) where “t” is a specified future time period. The current time period is 0 (t=0). The machines used to make this product have a capacity of 50 units/time period. The company currently has 4 machines yielding a total capacity of 200 units/time period. Due to technology changes, the current equipment will become obsolete at the end of period 15. If a new machine costs $2000, and the net revenue earned per unit is $10, how many machines should be added between today (t=0) and the end of period 15?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 46P

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