How large a wozac plant the company should build

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Reference no: EM131195250

Assume the demand for a company's drug Wozac during the current year is 50,000, and assume demand will grow at 5% a year.

If the company builds a plant that can produce x units of Wozac per year, it will cost $16x. Each unit of Wozac is sold for $3. Each unit of Wozac produced incurs a variable production cost of $0.20. It costs $0.40 per year to operate a unit of capacity.

Determine how large a Wozac plant the company should build to maximize its expected profit over the next 10 years.

Reference no: EM131195250

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