Total cost
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Problem 1
In deciding whether to set up a new manufacturing plant, company analysts have decided that a linear function is a reasonable estimation for the total cost C(x) to produce x items. They estimate the cost to produce 10,000 items as $547,500 and the cost to produce 50,000 items as $737,500
(a) Find the formula for C(x)
(b) Find the total cost to produce 100,000 items
(c) Find the total cost to produce 0 items
(d) Find the marginal cost of the items to be produced in this plant.
You are the manager of a firm. You are considering the manufacture of a new product, so you ask the accounting department for cost estimates and the sales department for sales estimate. After you receive the data, you must decide whether to go ahead with production of the new product.
Note: C(x) denotes the cost function and R(x) denotes the revenue function
For problem 2 and 3 below do the following:
(a) find a break even quantity and then
(b) decide what you would do in each case (go ahead with the production or not ?).
(c) Also write the profit function and identify the value of x, number of units, for which the profit is maximum.
Problem 2
C(x) = 105 x + 6000 ; R(x) = 250 x ; no more than 400 units can be sold.
Problem 3
C(x) = 1000x + 5000 ; R(x) = 900 x ; no restriction on the number of units that can be sold.
In problem 4 and problem 5, let C(x) be the cost to produce x widgets and let R(x) be the revenue.
For each problem 4 and 5 do the following:
(a) find the break even quantity
(b) find the maximum revenue
(c) find the number of widgets, x, that generates the maximum revenue
(d) find the maximum profit
(e) find the number of widgets, x, that generates the maximum profit
Problem 4
R(x) = - + 8x
C(x) = x + 15
Problem 5
R(x) = - 4 + 40x
C(x) = 4x + 77
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Solution Summary
There are a variety of problems regarding solving systems of equations, including several optimization/total cost problems.
Education
- BSc , Wuhan Univ. China
- MA, Shandong Univ.
Recent Feedback
- "Your solution, looks excellent. I recognize things from previous chapters. I have seen the standard deviation formula you used to get 5.154. I do understand the Central Limit Theorem needs the sample size (n) to be greater than 30, we have 100. I do understand the sample mean(s) of the population will follow a normal distribution, and that CLT states the sample mean of population is the population (mean), we have 143.74. But when and WHY do we use the standard deviation formula where you got 5.154. WHEN & Why use standard deviation of the sample mean. I don't understand, why don't we simply use the "100" I understand that standard deviation is the square root of variance. I do understand that the variance is the square of the differences of each sample data value minus the mean. But somehow, why not use 100, why use standard deviation of sample mean? Please help explain."
- "excellent work"
- "Thank you so much for all of your help!!! I will be posting another assignment. Please let me know (once posted), if the credits I'm offering is enough or you ! Thanks again!"
- "Thank you"
- "Thank you very much for your valuable time and assistance!"
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