Which of the warehouse configurations is best for jackson

Reference no: EM13696142

Jackson Sheds has four different warehouse configurations under study, ranging from four warehouses to seven warehouses. So they are considering whether to have 4, 5, 6, or 7 warehouses. Each warehouse has a capacity of 400 units and costs $200 to maintain over the course of a year. Demand can range from 1000 units per year up to 2000 units per year in increments of 250 units. If the system warehouse capacity is sufficient to handle the year's demand, then the per unit cost is $2 per unit. However, if the warehouse capacity is insufficient, the per unit cost for each unit in excess of the system capacity is $5 per unit. The probability (likelihood) for each possible demand is shown below.

Demand 1000 1250 1500 1750 2000
Probability 0.1 0.2 0.3 0.3 0.1

Based on the expected cost of each warehouse configuration, which of the warehouse configurations is best for Jackson Sheds?

Reference no: EM13696142

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