Jackson Sheds has four different warehouse configurations under study, ranging from four warehouses to seven warehouses (only integer values). Each warehouse has a capacity of 200 units and costs $400 to maintain over the course of a year. Demand can range from 1,000 units per year up to 2,000 units in increments of 250 units. If the system warehouse capacity is sufficient to handle the year's demand, then the per unit cost is $2 per unit, but if the warehouse capacity is insufficient, the per unit cost for each unit in excess of system capacity is $5 per unit. The likelihood for each possible demand is shown in the table. Likelihood Demand 0.1 0.2 0.3 0.3 0.1 1,000 1,250 1,500 1,750 2,000 Which warehouse configuration is best for Jackson Sheds? Answer: The cost table for four through seven warehouses is shown; the lowest expected cost occurs at a seven-warehouse system. Demand Warehouses 1000 1250 1500 1750 2000 Cost 4 $4,200 $5,450 $6,700 $7,950 $9,200 $6,825 5 $4,000 $5,250 $6,500 $7,750 $9,000 $6,625 6 $4,400 $5,050 $6,300 $7,550 $8,800 $6,485 7 $4,800 $5,300 $6,100 $7,350 $8,600 $6,435 Likelihood 0.1 0.2 0.3 0.3 0.1