A manufacturer of TV watches uses three TRS7 electronic chips in each TV watches produced.

Demand estimates for the number of TV watches that could be sold next year are shown Demand X 20000 40000 50000 P (X) 0.30 0.50 0.20

(a) Assuming the firm decides to produce on an expected value basis, how many TRS7 chips should they plan to produce for next year’s sales?

(b) What capacity is required to meet 150 percent of expected demand?