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A company is planning to add extra capacity to a plant currently manufactur - ing 1 1 0 0 0 0 items per year. After

A company is planning to add extra capacity to a plant currently manufactur-
ing 110000 items per year. After an accurate sales forecast for the next few years
(based on data entries of the last 12 years), the logistics manager is quite sure that
the most likely value of the annual demand is 140000 items and that the MSE is
equal to 108 items. It is known that the company loses $3 for each unit of unused
capacity and $7 for each unit of unsatisfied demand. How much capacity should
the company buy? (Hint: suppose that the forecasting error can be assumed as a
random variable normally distributed).

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