Business, 26.11.2019 02:31 jazminjb83

Drugco needs to determine the proper capacity level for a new drug, niagara. it costs $10 to build enough capacity to produce one unit of drug per year. all construction cost is incurred during year 0. it costs $10 per year to maintain a previously-built unit of annual production capacity. in year 1 we know demand will be 160,000 units of niagara. after that demand will grow randomly. assume the actual growth rate of demand during any year is normally distributed with a standard deviation of 6%. the mean growth in demand for niagara is equally likely to assume any value between 10% and 20%

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