Business, 11.02.2021 20:50 ethanmatthews2336

A job shop has received an order for high-precision formed parts. The cost of producingeach part is estimated to be $65,000. The customer requires that either 8, 9, or 10 partsto be supplied. Each good part sold will produce revenue of $100,000. However, if fewerthan 8 good parts are produced, none will be purchased; if more than 10 good parts areproduced, the excess will not be purchased. The probability of an individual part beingacceptable equals 0.85. a) Calculate the expected profit for batch production quantities of 8, 9, 10, 11, and 12. What is the optimum batch production quantity if the objective is to maximize expected profit?
b) Calculate the probability of losing money for batch production quantities of 8, 9, 10, 11, and 12. What is the optimum batch production quantity if the objective is to minimize the probability of losing money?

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