The net annual operating cost (AOC) for a water treatment filtration plant for a semi-conductor fabrication line was estimated to be $1.5 million per year. The estimate was based on the $200,000 per year cost of a 1-MGD plant. The exponent in the cost-capacity equation is 0.80. (a) What was the size of the larger plant? (b) Build a spreadsheet to answer the same question. (c) If the plant manager has limited the AOC to $1 million per year, use your spreadsheet to determine the maximum MGD size plant that can be planned.

The net annual operating cost (AOC) for a water treatment filtration plant for a semi-conductor fabrication line was estimated to be $1.5 million per year. The estimate was based on the $200,000 per year cost of a 1-MGD plant. The exponent in the cost-capacity equation is 0.80. (a) What was the size of the larger plant? (b) Build a spreadsheet to answer the same question. (c) If the plant manager has limited the AOC to $1 million per year, use your spreadsheet to determine the maximum MGD size plant that can be planned.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter3: Benefits, Costs, And Decisions

Section: Chapter Questions

Problem 8MC

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Similar questions

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