M.

Arsalan Ahmed
0048

Identify the criterion, actions and events in this scenario.

Actions
selling price
fixed cost
Break Even Volume
Profit

Criteria
Profit maximization

Event
variable cost
demand
capacity

Whether they should undertake this project?

No because although expected return is higher but standard deviation is quite more than expected
value.

What does the distribution of profit look like under different capacity
levels?

1,500,000

2,000,000

M.Arsalan Ahmed
0048

2,500,000

3,000,000

3,500,000

M.Arsalan Ahmed
0048

4,000,000

4,500,000

5,000,000

What is the optimal capacity that they should install?

The capacity should be 1,500,000 as it is giving us average profit of 9586703.39.