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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
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 52 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 Do the cost table calculations, Warehouses 4 Demand 1000 1250 1500 1750 2000 Cost 5? $ 5,450 $ 6.700 $ 7.950 $ 9,200 56,825 $ 4,000 $ 5,250 $ 6,500 $ 7.750 $9,000 ? $ 4,400 $ 5.050 $ 6,300 $ 7.550 $8,800 2 $? $ 5.300 56.100 $ 7.350 S 8.600 ? 0.1 0.2 0.3 0.3 0.1 6 7 Likelihood Which warehouse configuration is best for Jackson Sheds, with the lowest expected cost? 04 5 06
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