Ask Question
7 March, 14:49

A manufacturer of industrial sales has production capacity of 1,000 units per day. Currently, the firm sells production capacity for $10 per unit. At this price, all production capacity gets booked about one week in advance. A group of customers have said that they would be willing to pay $15 per unit if capacity was available on the last day. About ten 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 the manufacturer reserve for the last day

+1
Answers (1)
  1. 7 March, 14:55
    0
    The production capacity the manufacturer should reserve for the last day = 206.00 units.

    Explanation:

    Normal production = 1000 X $ 10

    Normal production = $ 10,000

    Spot production = 1,000 X $ 15

    Spot production = $ 15,000

    p * = 15,000 - 10,000 / 15,000

    p * = 0.33

    Q = norminv (0.33,250,100)

    The production capacity the manufacturer should reserve for the last day = 206.00 units
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “A manufacturer of industrial sales has production capacity of 1,000 units per day. Currently, the firm sells production capacity for $10 ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers