Question 1

Question 1

Net Profit Plants Capacity Configuration Plant
Products 1 2 Products 1 2 Demand
Demand: A: 1000; B: 1000 A 7 10 A 1000
Probability: 0.25 B 6 4 B 1000
Profit: Capacity 2000 2000
Demand A: 1000
Net Profit Plants Capacity Configuration Plant
Demand: A: 1000; B: 3000 Products 1 2 Products 1 2 Demand
Probability: 0.25 A 7 10 A 1000
Overall Expected Profit: B 6 4 B 3000
Start Profit: Capacity 2000 2000
Net Profit Plants Capacity Configuration Plant
Demand: A: 3000; B: 1000 Products 1 2 Products 1 2 Demand
Probability: 0.25 A 7 10 A 3000
B 6 4 B 1000
Demand A: 3000 Profit: Capacity 2000 2000
Demand: A: 3000; B: 3000 Net Profit Plants Capacity Configuration Plant
Probability: 0.25 Products 1 2 Products 1 2 Demand
A 7 10 A 3000
B 6 4 B 3000
Profit: Capacity 2000 2000

Hint:
Step 1: Under each demand scenario, try to figure out how much to produce for products A and B in Plants 1 and 2 in the gray area. The production plan you propose should maximize the profit under this demand scenario.
Step 2: Calculate the corresponding profit given the production plan you proposed in the light blue area.
Step 3: Calculate the overall expected profit that summarizing all the demand senarios. Report it in the light green area.
Step 4: Answer the following questions in the textbox.

Question: Why the capacity at these plants is sometimes larger than the demand?

Your answer:

Question 2

Question 2a:

Your answer:

Question 2b:

Your answer:

Question 2c:

Your answer:

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