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A major oil company is considering the optimal timing for capacity expansion. Based on past experience it estimates the cost of new capacity additions obeys
A major oil company is considering the optimal timing for capacity expansion. Based on past experience it estimates the cost of new capacity additions obeys the laws f(y)=0.0061y^(0.7485). where y is measured in units of barrels per year and f(y) in millions of dollars. assume demand is increasing at a constant rate of two million barrels yearly and the discount is 15%. Determine the optimal timing of plant additions and the optimal size of each plant. Figure one shows f(u)=u/(e^(u)-1)
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