Homework 1

You are thinking of opening a small copy shop. It

costs $5000 to rent a copier for a year and costs $0.03

per copy to operate the copier. Other fixed costs of

running the store will amount to $400 per month. You

plan to charge an average of $0.10 per copy, and the

store will be open 365 days per year. Each copier can

make up to 100,000 copies per year.

a. For 1 to 5 copiers rented and daily demands of

500, 1000, 1500, and 2000 copies per day, compute

annual profit. That is, compute annual profit for

each of these combinations of copiers rented and

daily demand. (10pts)

b. If you rent 3 copiers, what daily demand for copies

will allow you to break even? (10pts)

c. Graph profit as a function of the number of copiers

for a daily demand of 500 copies; for a daily

demand of 2000 copies. Interpret your graphs. (10pts)

You want to examine the relationship between the number of machines working and the number of processing minutes achieved. You conduct 18 spot checks every half hour and record the following data. Create an x-y scatter plot of the data and comment about its (10pts) What would happen if you plotted this data using a different chart type? Ex, a line chart (10pts)

Assume the demand for the drug Wozac during the

current year is 50,000, and assume demand will grow

at 5% a year. If you build 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 to build to maximize

expected profit over the next 10 years

(Build Spreadsheet: 10pts, answer the question: 10pts)