=+4. (**) Following problem 3, suppose that Deutsch Centre can increase its capacity that will add to its fixed cost and reduce the service cost for each car. It can then have two capacity options as shown below:

OPTIONS FIXED COST

(PER DAY)

VARIABLE COST

(PER UNIT)

Capacity level 1 €1,200 €110 Capacity level 2 €2,000 €80 Deutsch Centre has also identified the following three demand probabilities:

DEMAND (CARS PER DAY) PROBABILITY 15 70%

25 20%

40 10%