Felgas, a manufacturer of felt gaskets, has production capacity of 1,000 units per day. Currently, the firm
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Felgas, a manufacturer of felt gaskets, has production capacity of 1,000 units per day. Currently, the firm sells production capacity for $5 per unit. At this price, all production capacity gets booked about one week in advance. Some customers have said that they would be willing to pay twice as much ($10 per unit) if Felgas had capacity available on the last day. About 10 days in advance, demand for the high-price segment is normally distributed, with a mean of 250 and a standard deviation of 100.
How much production capacity should Felgas reserve for the last day?
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