Sep 28, 2017 term paper 2

ASSUME THE DEMAND FOR A COMPANY’S DRUG WOZAC DURING THE CURRENT YEAR IS 50,000, AND ASSUME DEMAND…

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Assume the demand for a company’s drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year: If the company builds a plant that can produce x units of Wozac per year, it will cost $16x. Each unit of Wozac is sold for $3. Each unit of Wozac produced incurs a variable production cost of $0.20. It costs $0.40 per year to operate a unit of capacity. Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years. Enter this optimal capacity into your input cell.


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