Answer the following 3 questions. A successful response will fully answer each question. Please make sure you document your work and provide sufficient explanations on how you got to each answer.

1. Distinguish between design capacity and system capacity.

2. 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

1. Assuming the firm decides to produce on a expected value basis, how many TRS7 chips should they plan to produce for next year's sales?
2. What capacity is required to meet 150 percent of expected demand.

3. An automatic drive-in teller at American National Bank has the capacity of handling 2,000 entries per regular banking day (according the the firm that sold it to the bank). However, because of limitations imposed by automobile access, the teller is available only 60 per cent of the time. It is actually being used for about 800 entries per day. What is the system efficiency?