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Suppose we want to choose capacity for a plant that will produce a new drug. In particular, we want to choose the capacity that maximizes
Suppose we want to choose capacity for a plant that will produce a new drug. In particular, we want to choose the capacity that maximizes discounted expected profit over the next years. We have the following information: Demand for the drug is expected to be normally distributed ~ Normal A unit of capacity costs $ to build. The number of units produced will equal the demand, up to capacity limits The revenue per unit is $ and the cost per unit is $variable cost The maintenance cost per unit of capacity is $fixed cost The discount rate is Perform a simulation assuming the plant will be designed to meet the expected demand ie units You may use the template below to build your model:
Suppose we want to choose capacity for a plant that will produce a new drug. In particular, we want to choose the capacity that maximizes discounted expected profit over the next years. We have the following information:
Demand for the drug is expected to be normally distributed ~ Normal
A unit of capacity costs $ to build.
The number of units produced will equal the demand, up to capacity limits
The revenue per unit is $ and the cost per unit is $variable cost
The maintenance cost per unit of capacity is $fixed cost
The discount rate is
Perform a simulation assuming the plant will be designed to meet the expected demand ie units You may use the template below to build your model:
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