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

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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