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 1. A manufacturer of printed circuit boards has a design capacity of 1,000 boards per day. The effective capacity, however, is 704 boards per day. Recently, the production facility has been producing 915 boards per day. Compute the design and effective capacity utilization measures.

(Round your answers to 1 decimal place, e.g. 3.5%.)

Utilization Effective =         %  

Utilization Design =            %

2.  The town barber shop can accommodate 32 customers per day. The manager has determined that if two additional barbers are hired, the shop can accommodate 76 customers per day. What are the design and effective capacities for the barber shop?

Effective capacity =             customers/day
Design capacity =               customers/day 

3.  Demand has grown at Dairy May Farms, and it is considering expanding. One option is to expand by purchasing a very large farm that will be able to meet expected future demand. Another option is to expand the current facility by a small amount now and take a wait-and-see attitude, with the possibility of a larger expansion in two years.
Management has estimated the following chances for demand:

  • The likelihood of demand being high is 0.72.
  • The likelihood of demand being low is 0.28.

Profits for each alternative have been estimated as follows:

  • Large expansion has an estimated profitability of either $51,900 or $24,100, depending on whether demand turns out to be high or low.
  • Small expansion has a profitability of $15,100, assuming that demand is low.
  • Small expansion with an occurrence of high demand would require considering whether to expand further. If the company expands at that point, the profitability is expected to be $41,000. If it does not expand further, the profitability is expected to be $12,850.


(b) Calculate expected values for large and small expansions. What should Dairy May Farms do?

EV small expansion = $

EV large expansion = $

Company sould opt          expansion.