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capacity cushion

Question 19 of 19 4.0 Points
The ABC Cement Corporation produces three varieties of high quality cements that are supplied to construction companies. The annual demand for all these varieties and their corresponding probabilities for the year 2010 are as follows.
the year 2010 are as follows.
Variety Demand (in tons) Probability
I 500,000 0.3
II 250,000 0.4
III 300,000 0.3
Assuming that all the three varieties can be manufactured in the same cement kiln having a capacity of 700,000 tons, the capacity cushion equals:

A. 340,000 tons

B. 1,040,000 tons

C. 360,000 tons

D. 400,000 tons

E. It cannot be computed from this information.
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Solution Summary

The capacity cushion is assessed.