Find the optimal timing of plant additions

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Reference no: EM131725485

Based on past experience, a chemicals firm estimates that the cost of new capacity additions obeys the law F(y)=.0315y 0.65 Where y is measured in tons per year and f(y) in millions of dollars. Demand is growing at the rate of 4000 tons per year, and the accounting department recommends a rate of 15 percent per year for discounting future costs.

a) Use both graph method to estimate the optimal timing of plant additions, then use Excel Goal Seek to find the optimal timing of plant additions

b) determine and the optimal size of each addition

c) What is the cost of each addition?

Reference no: EM131725485

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