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millions of tons probability 1 0 0 . 1 1 2 0 . 2 5 1 4 0 . 3 1 6 0 . 2

millions of tons probability
100.1
120.25
140.3
160.2
180.15 Problem 1.
A still company estimates the demand for steel as follows (in millions of tons per year):
a.(0.3 points) If capacity is set at 18 million tons, how much of a capacity cushion is there?
b.(0.2 points) What is the probability of idle capacity if capacity is set at 16 million tons?
c.(0.5 points) If it costs $8 million per million tons of lost business and $80 million to build a million tons of capacity, which capacity level, among 10,12,14,16, and 18, will minimize the total costs?

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