A proprietor of a food-stall has invented a new item of food delicacy which he calls WHIM. He has calculated that the cost of manufacture is Re. 1 per piece and that because of its novelty and quality it would be sold for Rs. 3 per piece. It is, however, perishable, and any goods unsold at the end of the day are a dead loss. He expects the demand to be variable and has drawn up the following probability distribution. 14 No. of pieces demanded: Probability (i) Find the value of k. 10 11 12 13 15 k + 0:02 k + 0.05 5k-0.02 7k + 0:03 2k + 0-02 2k (ii) Find an expression for his net profit or loss if he manufactures m pieces and only n are demanded; consider separately the two cases n Sm, n> m. (iii) Assume that he manufactures 12 pieces. using the result in (i) ab ove, find his net profit or loss for ea (v) Also obtain the net profits for di fferent levels of demand and produ ction, each ranging from 10 to 15. ch level of demand. (iv) Using the probability distributio n, calculate his expected net profit or loss, if he manufactures 12 piec (vi) For what level of production is t he net profit maximum ? es

A proprietor of a food-stall has invented a new item of food delicacy which he calls WHIM. He has calculated that the cost of manufacture is Re. 1 per piece and that because of its novelty and quality it would be sold for Rs. 3 per piece. It is, however, perishable, and any goods unsold at the end of the day are a dead loss. He expects the demand to be variable and has drawn up the following probability distribution. 14 No. of pieces demanded: Probability (i) Find the value of k. 10 11 12 13 15 k + 0:02 k + 0.05 5k-0.02 7k + 0:03 2k + 0-02 2k (ii) Find an expression for his net profit or loss if he manufactures m pieces and only n are demanded; consider separately the two cases n Sm, n> m. (iii) Assume that he manufactures 12 pieces. using the result in (i) ab ove, find his net profit or loss for ea (v) Also obtain the net profits for di fferent levels of demand and produ ction, each ranging from 10 to 15. ch level of demand. (iv) Using the probability distributio n, calculate his expected net profit or loss, if he manufactures 12 piec (vi) For what level of production is t he net profit maximum ? es

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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