The values of k and a assuming f ( y ) = k y a as the relationship. Introduction: From the past experiences, a big oil company can evaluate its present and the future costs. According to its study, each doubling of the size of a refinery at a single location results in the construction coststo about 68%.

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Answer 1

Question

Chapter 1.11, Problem 42P

a.

Summary Introduction

To determine: The values of k and a assuming f(y)=kya as the relationship.

Introduction: From the past experiences, a big oil company can evaluate its present and the future costs. According to its study, each doubling of the size of a refinery at a single location results in the construction coststo about 68%.

b.

Summary Introduction

To determine: The best time to make additions in plant and the optimal size of each addition.

Introduction: Based on previous experiences, the oil company can easily predict the vivid picture of its present and future. Likewise, it can determine the optimal timing of plant additions and the optimal size of each addition too.

c.

Summary Introduction

To determine: The best timing to make additions in plant and the optimal size of each addition if the largest single refinery can be built with current technology is 15,000 barrels daily.

Introduction: When the major oil company installs the largest single refinery then its optimal size will not necessarily be huge while talking about the annual count. Similarly, the optimal timing of adding the plant will not necessarily be more always.

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A major oil company is considering the optimal timing for the construction of new refineries. From past experience, each doubling of the size of a refinery at a singlelocation results in an increase in the construction costs of about 68 percent. Furthermore, a plant size of 10,000 barrels per day costs $6 million. Assume that thedemand for the oil is increasing at a constant rate of two million barrels yearly andthe discount rate for future costs is 15 percent.a. Find the values of k and a assuming a relationship of the form f(y) kya.Assume that y is in units of barrels per day.b. Determine the optimal timing of plant additions and the optimal size of each plant.c. Suppose that the largest single refinery that can be built with current technology is 15,000 barrels per day. Determine the optimal timing of plant additionsand the optimal size of each plant in this case. (Assume 365 days per year foryour calculations.)

A convenience store manager earns a base salary plus a small bonus of $190 for each of ten different possible monthly milestones he meets. If the manager meets a milestone, the full bonus is paid. However, if the manager falls even one penny short, none of that bonus is paid. Suppose each of the ten milestones requires 40 hours of effort to meet, and that the manager has 160 hours of effort to allocate to work each month. Question: In order to maximize the total monthly bonus, the manager should allocate___hours toward meeting each of ___ milestones and ___hours toward meeting each of the remaining___ sales milestones. There are 4 blanks to fill for this question

For Lodes Company, the relevant range of production is 40–80% of capacity. At 40% of capacity, a variable cost is $4,000 and a fixed cost is $6,000. Explain the behavior of each cost within the relevant range assuming the behavior is linear.

Answer 2

Question

Chapter 1.11, Problem 42P

a.

Summary Introduction

To determine: The values of k and a assuming f(y)=kya as the relationship.

Introduction: From the past experiences, a big oil company can evaluate its present and the future costs. According to its study, each doubling of the size of a refinery at a single location results in the construction coststo about 68%.

b.

Summary Introduction

To determine: The best time to make additions in plant and the optimal size of each addition.

Introduction: Based on previous experiences, the oil company can easily predict the vivid picture of its present and future. Likewise, it can determine the optimal timing of plant additions and the optimal size of each addition too.

c.

Summary Introduction

To determine: The best timing to make additions in plant and the optimal size of each addition if the largest single refinery can be built with current technology is 15,000 barrels daily.

Introduction: When the major oil company installs the largest single refinery then its optimal size will not necessarily be huge while talking about the annual count. Similarly, the optimal timing of adding the plant will not necessarily be more always.

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Answer 3

Question

Chapter 1.11, Problem 42P

a.

Summary Introduction

To determine: The values of k and a assuming f(y)=kya as the relationship.

Introduction: From the past experiences, a big oil company can evaluate its present and the future costs. According to its study, each doubling of the size of a refinery at a single location results in the construction coststo about 68%.

b.

Summary Introduction

To determine: The best time to make additions in plant and the optimal size of each addition.

Introduction: Based on previous experiences, the oil company can easily predict the vivid picture of its present and future. Likewise, it can determine the optimal timing of plant additions and the optimal size of each addition too.

c.

Summary Introduction

To determine: The best timing to make additions in plant and the optimal size of each addition if the largest single refinery can be built with current technology is 15,000 barrels daily.

Introduction: When the major oil company installs the largest single refinery then its optimal size will not necessarily be huge while talking about the annual count. Similarly, the optimal timing of adding the plant will not necessarily be more always.

Expert Solution & Answer

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Answer 4

Question

Chapter 1.11, Problem 42P

a.

Summary Introduction

To determine: The values of k and a assuming f(y)=kya as the relationship.

Introduction: From the past experiences, a big oil company can evaluate its present and the future costs. According to its study, each doubling of the size of a refinery at a single location results in the construction coststo about 68%.

b.

Summary Introduction

To determine: The best time to make additions in plant and the optimal size of each addition.

Introduction: Based on previous experiences, the oil company can easily predict the vivid picture of its present and future. Likewise, it can determine the optimal timing of plant additions and the optimal size of each addition too.

c.

Summary Introduction

To determine: The best timing to make additions in plant and the optimal size of each addition if the largest single refinery can be built with current technology is 15,000 barrels daily.

Introduction: When the major oil company installs the largest single refinery then its optimal size will not necessarily be huge while talking about the annual count. Similarly, the optimal timing of adding the plant will not necessarily be more always.

Expert Solution & Answer

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Answer 5

Chapter 1.11, Problem 42P

a.

Summary Introduction

To determine: The values of k and a assuming f(y)=kya as the relationship.

Introduction: From the past experiences, a big oil company can evaluate its present and the future costs. According to its study, each doubling of the size of a refinery at a single location results in the construction coststo about 68%.

b.

Summary Introduction

To determine: The best time to make additions in plant and the optimal size of each addition.

Introduction: Based on previous experiences, the oil company can easily predict the vivid picture of its present and future. Likewise, it can determine the optimal timing of plant additions and the optimal size of each addition too.

c.

Summary Introduction

To determine: The best timing to make additions in plant and the optimal size of each addition if the largest single refinery can be built with current technology is 15,000 barrels daily.

Introduction: When the major oil company installs the largest single refinery then its optimal size will not necessarily be huge while talking about the annual count. Similarly, the optimal timing of adding the plant will not necessarily be more always.

Answer 6

Chapter 1.11, Problem 42P

a.

Summary Introduction

To determine: The values of k and a assuming f(y)=kya as the relationship.

Introduction: From the past experiences, a big oil company can evaluate its present and the future costs. According to its study, each doubling of the size of a refinery at a single location results in the construction coststo about 68%.

Answer 7

Chapter 1.11, Problem 42P

a.

Summary Introduction

To determine: The values of k and a assuming f(y)=kya as the relationship.

Introduction: From the past experiences, a big oil company can evaluate its present and the future costs. According to its study, each doubling of the size of a refinery at a single location results in the construction coststo about 68%.

Answer 8

b.

Summary Introduction

To determine: The best time to make additions in plant and the optimal size of each addition.

Introduction: Based on previous experiences, the oil company can easily predict the vivid picture of its present and future. Likewise, it can determine the optimal timing of plant additions and the optimal size of each addition too.

Answer 9

b.

Summary Introduction

To determine: The best time to make additions in plant and the optimal size of each addition.

Introduction: Based on previous experiences, the oil company can easily predict the vivid picture of its present and future. Likewise, it can determine the optimal timing of plant additions and the optimal size of each addition too.

Answer 10

c.

Summary Introduction

To determine: The best timing to make additions in plant and the optimal size of each addition if the largest single refinery can be built with current technology is 15,000 barrels daily.

Introduction: When the major oil company installs the largest single refinery then its optimal size will not necessarily be huge while talking about the annual count. Similarly, the optimal timing of adding the plant will not necessarily be more always.

Answer 11

c.

Summary Introduction

To determine: The best timing to make additions in plant and the optimal size of each addition if the largest single refinery can be built with current technology is 15,000 barrels daily.

Introduction: When the major oil company installs the largest single refinery then its optimal size will not necessarily be huge while talking about the annual count. Similarly, the optimal timing of adding the plant will not necessarily be more always.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 1.3 - Prob. 1P Ch. 1.3 - Prob. 2P Ch. 1.3 - Prob. 3P Ch. 1.3 - Prob. 4P Ch. 1.3 - Prob. 5P Ch. 1.3 - Prob. 6P Ch. 1.3 - Prob. 7P Ch. 1.3 - Prob. 8P Ch. 1.3 - Prob. 9P Ch. 1.3 - Prob. 10P

Solution Summary: The author explains how doubling the size of a refinery results in the construction cost of about 68%.

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