Answer: A manufacturing company owns a major piece of equipment that depreciates at the
Chapter 5, Problem 33(choose chapter or problem)
A manufacturing company owns a major piece of equipment that depreciates at the (continuous) rate , where is the time measured in months since its last overhaul. Because a xed cost is incurred each time the machine is overhauled, the company wants to determine the optimal time (in months) between overhauls. (a) Explain why represents the loss in value of the machine over the period of time since the last overhaul. (b) Let be given byCt 1 t A yt 0 fsdsWhat does represent and why would the company want to minimize ? (c) Show that has a minimum value at the numbers where .
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