Question 1: Suppose you are a production manager of a firm that manufactures tires for cars. Customers are primarily interested in the expected lifetime of your tires, measured in kilometres driven before replacement is necessary. You understand that the lifetime of a tire is a random variable that depends on the the driving habits of the user, road conditions, and other factors. Explain in detail how you would go about determining the average lifetime of the tires you manufacture.
Question 2: You are the Materials Manager at a local hospital. Your job is to ensure that the hospital has a sufficient supply of protective masks for medical staff who are involved in the examination and testing of suspected COVID-19 cases. Each suspected case (i.e., patient) is examined and tested by a single nurse. With each new patient, the nurse must wear a new mask. On April 1, you expect the number of suspected cases to follow a Poisson distribution with a mean of 20. Each day thereafter, the expected (i.e., mean) number of suspected cases is forecast to increase by 10%. Explain in detail how you would decide how many masks to order for the entire month of April (assuming that masks are available).
Question 3: You are the production manager for a firm that manufactures eyeglass frames. From day to day, the size of your capital stock (i.e., factory and machines) remains constant, but the number of employees who work on the assembly line and the quality of output varies somewhat. Explain in detail what you would do to develop an estimate of how your firm’s total costs vary with the level of output.