man 5501

​_________ is a rule that allows a customer of higher priority to interrupt the service of another customer.

. A preemptive discipline

An expansionist capacity strategy is NOT indicated when

. expansion will lead to economies of scale.

Which of the following is a way that managers may attempt to affect the rate of customer​ arrivals?

A. differential pricing B. advertising C. special promotions D. All of the above. D all of the above

What would be the likely process characteristics of the typical college dining​ hall?

C. Line flows

The theory of constraints defines inventory as

C. all the money invested in a system in purchasing things that it intends to sell.

Question Help An example of a plant within a plant​ (PWP) is

C. an emergency department at a large municipal hospital.

Which of the following is NOT one of seven mistakes to avoid when managing​ processes?

C. being satisfied even when fundamental​ "reengineering" changes are not made

Some important metrics to consider for a financial advising firm might include

C. customer satisfaction.

A systematic approach to process analysis would include the following​ step:

D. Define scope

The six step blueprint for process analysis begins​ with:

D. Identify opportunity

An item that has been built to stock has yet to be sold. Which TOC operational measure is used to describe it in its current​ state?

D. Inventory

The result of a​ firm's splitting large​ plants, which produced all the​ company's products, into several specialized smaller plants is

D. focused factories.

A high​ customer-contact service process typically indicates all of the following​ EXCEPT:

D. low complexity.

An initial time study was done on a process with the following results​ (in minutes). Based on the data obtained so​ far, assuming an allowance of 22 percent of the normal​ time, what do you estimate for the time per customer​ served, based on this preliminary​ sample?

Find the average of each element, ​Next, multiply the performance rating by the corresponding average time to find the normal time, Compute the sum of the normal times to find the total normal time, To get the standard time​ (ST), just add in the allowance. ST=20.04​(1+0.22​)=24.45 minutes ​Therefore, based on the data obtained so​ far, assuming an allowance of 22 percent of the normal​ time, the standard time is approximately 24.45 minutes per unit customer served.

Suds and Duds Laundry washed and pressed the following number of dress shirts per week. For the given​ information, the labor productivity per hour for each week​ is:

Labor productivity = Output (Shirts)/Input (Labor hours).

labor productivity=

Policies processed/employee hours = 600 policies/ (3 employees)(40 Hours)= 5 policies/hour

Multifactor productivity level/ multifactor productivity ratio/ labor productivity level/ weekly profits The Big Black Bird Company​ (BBBC) has a large order for special​ plastic-lined military uniforms to be used in an urgent military operation. Working the normal two shifts of 40 hours each per​ week, the BBBC production process usually produces 2,600 uniforms per week at a standard cost of ​$120 each. 70 employees work the first shift and 32 the second. The contract price is ​$200 per uniform. Because of the urgent​ need, BBBC is authorized to use​ around-the-clock production, six days per week. When each of the two shifts works 72 hours per​ week, production increases to 3,800 uniforms per week but at a cost of ​$160 each. The multifactor productivity ratio based on the normal two shifts production level is ​(2,600×​$200​)/(2,600×​$120​)=1.67.

The multifactor productivity ratio based on the two shifts working 72 hours per week is ​(3,800× ​$200​)/(3,800×​$160​)=1.25. The multifactor productivity level decreased for two shifts working 72 hours when compared to the level of the normal two shift. The multifactor productivity ratio based on the normal two shift decreased by % Change =(Current Value − New Value)/Current Value ×100=25.15​% as compared to two shifts working 72 hours per week. The labor productivity ratio based on the normal two shifts production level is ​(2,600×​$200​)/(40×​(70+32​))=​$127.45 per hour. The labor productivity ratio based on the two shifts working 72 hours per week is ​(3,800×​$200​)/(72×​(70+32​))=​$103.49 per hour. The labor productivity level decreased for two shifts working 72 hours when compared to the level of the normal two shift. The labor productivity ratio based on the normal two shift decreased by % Change =(Current Value − New Value)/Current Value ×100=18.80​% as compared to two shifts working 72 hours per week. The profit based on the normal two shifts production of 2,600 uniforms is ​(2,600×​$200​)−​(2,600×​$120​)=​$208,000. The weekly profit based on the two shifts working 72 hours per week and producing 3,800 uniforms is ​(3,800×​$200​)−​(3,800×​$160​)=​$152,000. The weekly profits decreased as a result of production increasing to 3,800 as compared to the normal production of 2,600 uniforms.

Multifactor Productivity=

Value of output/ Labor Cost+ Materials Cost + Overhead Cost = (400units) (10/unit)? 400+1000+300= 4000/1700=2.35

By devising improved work​ methods, management is attempting to

increase the efficiency of servers.

The three mainline functions of any business are

operations, marketing, and finance.

Productivity=

output/input

A​ _______ customer is one who enters the system and remains there until being served.

patient

In a DBR​ system, the mechanism that controls the rate at which the bottleneck dictates the throughput of the entire plant is called the

rope.

The difference between​ people-processing service and​ possession-processing services is that

services are provided to the customer who must be present in​ people-processing; services are provided for the customer who does not need to be present in​ possession-processing services.

Jorge Ortega has been using a 10 percent capacity​ cushion, servicing 60 customers an hour. There is a good deal of customer​ contact, and customer service has been poor due to random fluctuations in demand. If he increases his capacity cushion to​ 20%, what will be the new capacity​ requirement?

B. 75

Which of the following elements are NOT common to​ waiting-line problems?

B. A​ random-number generator

Which of the following statements about productivity is​ correct?

B. Multifactor inputs must be expressed in a common unit of measure.

Chang and Chang observe that the competition is increasing the size of its warehouses. They have decided to do the same. They are following​ _______ strategy.

B. a follow the leader

Letting a group of people knowledgeable about the process propose ideas for change is an example of

B. brainstorming.

Which service process structure typically involves work flows with steps that vary from one customer to the​ next?

B. front office

There are several types of benchmarking. These​ include:

B. functional benchmarking.

A primary enabler of process reengineering is

B. information technology.

The theory of constraints methods increase the​ firm's profits more effectively by focusing on​ what?

B. making materials flow rapidly through the entire system

Which core process includes the activities required to produce and deliver the service or product to the external​ customer?

B. order fulfillment process

The Fine Feline Co. produces decorative collars for cats. Last week employees worked 320 hours and produced​ 32,000 cat collars. This week the workers worked the same 320​ hours, but produced​ 33,600 cat collars. Labor productively increased by​ _______ over last week.

B. ​32000+33622=65600 33622/65600=5%

In​ general, a less​ capital-intensive industry such as a hotel chain would do well with a utilization rate of

B. ​60-70%.

Food Goblin Supermarkets use both cashiers and baggers to serve customers at check out. During the first 5 hours of each workday​ (Monday-Friday), 7 cashiers and 4 baggers serve approximately 32 customers per hour. A cashier and a bagger who require approximately 6 minutes at checkout and 3 minutes at bagging serve each customer. a. How many employees should Food Goblin Supermarket schedule if it requires a 15 percent capacity​ cushion? b. Assume that both baggers and cashiers are​ cross-trained to perform both activities so that they can serve customers independently. Customers are now both checked and their groceries bagged by one individual.​ Further, assume that it takes 12 minutes for one individual to both cash out and bag each​ customer's groceries. How many employees should Food Goblin Supermarket schedule if it requires a 15 percent capacity​ cushion?

The capacity cushion is the amount of reserve capacity a process uses to handle sudden increases in demand or temporary losses of production​ capacity; it measures the amount by which the average utilization​ (in terms of total​ capacity) falls below 100 percent. Capacity cushion=100%−Average utilization rate (%) Find the average utilization rate required to provide the 15 percent capacity cushion. Utilization=​100%−15​% =85​% Find the average output rate for cashiers. Average output rate Cashier =32 customers×6 minutes/60 minutes per hour×5 hours per day×5 days per week =80.00hours per week Use the obtained value to find the required number of cashiers. Number of cashiers =80.00 hours85%/100%×5 days×5 hours =4cashiers Find the average output rate for baggers. Average output Bagger =32 customers×3 minutes/60 minutes per hour×5 hours per day×5 days per week =40.00hours per week Use the obtained values to find the required number of baggers. Number of baggers =40.00 hours85%/100%×5 days×5 hours =2baggers b.Find the average output rate for​ cross-trained employees. Average outputCross-trained= 32 customers×12 minutes/60 minutes per hour×5 hours per day×5 days per week =160.00 hours per week Use the obtained values to find the required number of​ cross-trained employees. Number of employees =160.00 hours/(85%/100%×5 days×5 hours) =8 cross-trained employees

Decisions that tend to focus on the entire​ organization, cutting across departmental​ lines, and have​ long-term consequences are called

strategic.

Which of the following ways represents how management can improve a service​ system?

A. assign more than one person to a service facility B. allocate service tasks to sequential phases C. affect the rate of customer arrivals D. All of the above. D all of the above

The manager of​ Perrotti's Pizza collects data concerning customer complaints about pizza delivery. a. Use a Pareto chart to identify the​ "vital few" delivery problems. b. The manager of​ Perrotti's Pizza is attempting to understand the root causes of late pizza delivery and has asked each driver to keep a log of specific difficulties that create late deliveries. After one​ week, the logs included the following​ entries:

A Pareto chart is a bar chart on which the factors are plotted in decreasing order of frequency along the horizontal axis. First sort the factors in decreasing order of frequency. Calculate the cumulative frequencies of types of problem. Frequency/total frequency b.delivery vehicle broke​ down, couldn't make it across town to deliver second pizza in​ time, couldn't deliver four pizzas to four different customers in​ time, kitchen was late in producing​ order, got​ lost, order ticket was lost in​ production, couldn't read address on ticket and went to wrong house. one lost invoice two vehicle broke down three service area too large four misunderstood address

​Ann's of Austin produces a premium Passion Fruit sorbet for local restaurants. Ann has unit costs of​ $1.60 per gallon​ (labor, 80​ cents; materials, 70​ cents; and​ overhead, 10​ cents) and she sells the product for​ $2.00 per gallon. What is her multifactor​ productivity?

A. 1.60/(.80+.70+.10)= 1.25

Only the operations function part of an organization must design and operate processes that are part of a supply chain and deal with​ quality, technology, and staffing issues.

A. False

The effective operation of a firm and its supply chain is NOT as important as the design and implementation of its processes.

A. False

Which of the following statements is generally true for manufacturing processes when volumes are high and process divergence is​ low

A. Flexibility is not needed to utilize resources effectively. B. Line flow is possible. C. Less discretion is allowed in order to avoid the unpredictable demands required by customized orders. D. All of the above statements are true.

Long-term capacity planning deals with which of the following​ factors?

A. Investment in new facilities

Which of the following are characteristics of service provider​ operations?

A. Perishable outputs

Which of the following statements about a high customer contact​ front-office service process is​ true?

A. The customer​ (internal or​ external) is​ present, actively​ involved, and receives personal attention.

Each function of an organization has its own identity and yet is connected with operations through shared processes.

A. True

SSS is a local restaurant serving the needs of college​ students, faculty, and staff. The manager is considering adding a website so​ carry-out customers can order in advance more easily. Which process would be a core process in this new​ undertaking?

A. Web design

A back office service structure is most similar to

A. a line process.

A measure of the reserve capacity a process has to handle in unexpected increases in demand is the

A. capacity cushion.

A​ ________ process is a set of activities that delivers value to external customers.

A. core

Bottlenecks exist in which type of manufacturing​ processes?

A. line process B. job process C. batch process D. All of the above. D all of the above

Selecting the transportation mode​ (train, ship,​ truck, airplane, or​ pipeline) and scheduling both​ in-bound and outbound shipments is typically accomplished by which supply chain​ process

A. logistics

A​ high-volume manufacturing process typically means all of the following​ EXCEPT:

A. more customer involvement.

Which of the following is a principal reason that explains why economies of scale can drive costs down when output​ increases?

A. process advantages are found B. costs of purchased materials are cut C. construction costs are reduced D. All of the above.

What is the objective that managers are trying to attain when they decide to allow customer​ preemption?

A. reduce the waiting times of select customers

A major supplier to an auto manufacturer would most likely adopt which production and inventory​ strategy?

A. ​Make-to-stock strategy

A good brainstorming session has the following​ characteristic:

Ability to think of creative​ ideas, no matter how far fetched

Of the seven key principles of the theory of​ constraints, which is the first​ principal?

D. the focus should be on balancing​ flow, not on balancing capacity

When is the customer population of a waiting line problem said to be​ infinite?

D. when the number of customers in the system does not affect the rate at which the population generates new customers

An airline company must plan its fleet capacity and its​ long-term schedule of aircraft usage. For one flight​ segment, the average number of customers per day is​ 70, which represents a 65 percent utilization rate of the equipment assigned to the flight segment. If demand is expected to increase to 95 customers for this flight segment in three​ years, what capacity requirement should be​ planned? Assume that management deems that a capacity cushion of 28 percent is appropriate. To determine the capacity​ requirement, use the formula​ below, where M is the capacity​ requirement, D is the demand forecast​ (in customers per​ day), and C is the desired capacity cushion​ (expressed as a​ percent).

M=D1/(−(C/100)) Evaluate the equation by substituting 95 for D and 28 for C. The solution is shown rounded up to the next whole number. M =D/(1−(C/100)) =95/(1−(28/100)) =132 ​Therefore, the needed capacity requirement is 132 customers per day.

Dr. Gulakowicz is an orthodontist. She estimates that adding two new chairs will increase fixed costs by $153,000​, including the annual equivalent cost of the capital investment and the salary of one more technician. Each new patient is expected to bring in $2,980 per year in additional​ revenue, with variable costs estimated at $1,060 per patient. The two new chairs will allow Dr. Gulakowicz to expand her practice by as many as 210 patients annually. How many patients would have to be added for the new process to break​ even?

Q=$153,000/($2,980−$1,060)=80 patients.

Mary​ Williams, owner of Williams​ Products, is evaluating whether to introduce a new product line. After thinking through the production process and the costs of raw materials and new​ equipment, Williams estimates the variable costs of each unit produced and sold at ​$7 and the fixed costs per year at ​$65,000. a. If the selling price is set at ​$20 ​each, how many units must be produced and sold for Williams to break​ even? Use both graphic and algebraic approaches to get your answer. b. Williams forecasts sales of 10,000 units for the first year if the selling price is set at ​$18.00 each. What would be the total contribution to profits from this new product during the first​ year? c. If the selling price is set at ​$14.50​, Williams forecasts that​ first-year sales would increase to 12,500 units. Which pricing strategy ​($18.00 or ​$14.50​) would result in the greater total contribution to​ profits? d. What other considerations would be crucial to the final decision about making and marketing the new​ product?

Q=65,000/(20−7)=5,000 units Total cost=F+cQ and Total revenue=pQ 1 2 Quantity ​ 0 10000 Total Annual Cost​ ($) ​(65,000+7Q​) 65000 135000 Total Annual Revenue​ ($) ​(20Q​) 0 200000 Plot the two​ lines, total annual cost and total annual​ revenue, on the same graph. Graphic approach gives the same​ result: 5,000 units must be produced and sold for Williams to break even. Note that ​Break-Even Analysis Solver of OM Explorer can also be used to solve the problem graphically. b. Profit=Revenue−Total cost = pQ−(F+cQ) =($18.00)(10,000)−[$65,000+($7)(10,000)] =$45,000 ​Thus, if Williams forecasts sales of 10,000 units at ​$18.00 each for the first​ year, the profit would be ​$45,000. c.Compute the profit for sales of 12,500 units at ​$14.50 each for the first year. Profit=Revenue−Total cost =pQ−(F+cQ) =($14.50)(12,500)−[$65,000+($7)(12,500)] =​$28,750 ​Therefore, the strategy of using a price of ​$18.00 will result in a greater contribution to profits. d.Williams must also consider how this product fits within her existing product line from the perspective of required technologies and distribution channels. Other​ marketing, operations, and financial criteria must also be considered.

break-even volume

Q=F/(p−c​) where Q is the​ break-even volume, F is the fixed​ cost, p is the revenue per​ patient, and c is the variable cost per unit.

Purple Swift manufactures birdhouses in lots of 10. Each birdhouse takes 45 minutes to paint. After 10 birdhouses are​ painted, the company switches paint color which requires a one-hour changeover. Assume that the company should changeover at the very beginning of the process. The company works 8 hours per​ shift, one shift per​ day, 210 days per year. Currently, the company has one point booth. What is Purple​ Swift's paint capacity cushion if it builds 1,850 birdhouses per​ year?

The capacity cushion is the amount of reserve capacity a process uses to handle sudden increases in demand or temporary losses of production​ capacity; it measures the amount by which the average utilization​ (in terms of total​ capacity) falls below 100 percent. When just one service or product is processed at an operation and the time period is a particular​ year, the capacity​ requirement, M​, is M=Dp/(N1−C100)​, where D=Demand forecast for the year​ (number of units​ produced), p=processing time​ (in hours per unit​ produced), N=total number of hours per year during which the process​ operates, C=desired capacity cushion​ (expressed as a​ percent). Use the formula provided above to find the capacity​ cushion: C=(1−Dp/MN) ×100%. The capacity​ requirement, ​M, is given in the text ​(one point​ booth). Find the total number of hours per year during which the process operates. N=8 hours per shift×1 shift per day×210 days per year =1,680 hours per week Find the number of total hours required for the demand forecast. Dp=Total number of items×Process time per item+Total number of lots×Time to changeover= 1,850×45​/60+1,850​/10×1=1,573 hours Use the obtained values to find the capacity cushion. C=(1−1,573/(1×1,680))×100%=6.4​%

Multifactor productivity ratio/ labor productivity ratio Student tuition at Boehring University is ​$180 per semester credit hour. The state supplements school revenue by ​$90 per semester credit hour. Average class size for a typical 3​-credit course is 45 students. Labor costs are ​$4,000 per​ class, materials costs are ​$22 per student per​ class, and overhead costs are ​$24,000 per class. The multifactor productivity ratio currently is 1.26 and the labor productivity ratio is ​$162.72 per hour if the instructors work on an average of 14 hours per week for 16 weeks for each 3​-credit class of 45 students. Coach Bjourn Toulouse led the Big Red Herrings to several disappointing football seasons. Only better recruiting will return the Big Red Herrings to winning form. Because of the current state of the​ program, Boehring University fans are unlikely to support increases in the​ $192 season ticket price. Improved recruitment will increase overhead costs to ​$31,000 per class section from the current ​$24,000 per class section. The​ university's budget plan is to cover recruitment costs by increasing the average class size to 85 students. Labor costs will increase to ​$6,500 per 3​-credit course. Material costs will be about ​$30 per student for each 3​-credit course. Tuition will be ​$250 per semester​ credit, which is supplemented by state support of ​$90 per semester credit.

The revenue earned ​(output) by the university per 3​-credit course with an average class size of 85 ​is: Value of output = 85 ​students/class×3​-credit hours per student×​($250+​$90​)/credit hour=​$86,700 per class. The cost incurred ​(input) by the university per 3​-credit course with an average class size of 85 ​is: Value of inputs =Labor + Materials + Overhead=​$6,500+​($30×85​)+​$31,000=​$40,050 per class. Productivity = OutputTotal Input. In the case of multiple inputs​, total inputs should be reflected in one common measure​ (i.e., dollars). The multifactor productivity ratio with the​ university's plan to meet the expenses related to improving the recruitment is ​$86,700​/$40,050=2.16. As compared to present multifactor productivity ratio ​(1.26​), the​ university's plan will result in an improved multifactor productivity ratio ​(2.16​). The labor hours ​(input) spent by the university per 3​-credit course with an average class size of 85 if instructors are going to work an average of 20 hours per week for 16 weeks​ is: Labor hours of inputs ​= 20 hours per week×16 weeks=320 hours per class. Labor productivity =Total outputLabor hours. If instructors are going to work an average of 20 hours per week for 16 weeks for each 3​-credit class of 85 ​students, the labor productivity ratio is ​$86,700​/320 hours=​$270.94 per hour.

​Knott's Industries manufactures standard and super premium backyard swing sets. Currently it has four identical​ swing-set-making machines, which are operated 350 days per year and 8 hours each day. A capacity cushion of 15 percent is desired. The following information is also​ known: Standard model Super Premium Model Annual Demand 20000 10000 Standard Processing Time 10 min 20 min Average Lot Size 50 25 Standard Setup Time per Lot 30 min 45 min

To determine if​ Knott's Industries has sufficient​ capacity, determine the number of machines needed to meet annual demand. Use the formula​ below, where M is the number of machines​ required, D is the demand forecast​ (in units of​ product), p is the processing time​ (in minutes per unit​ produced), N is the total number of minutes per year during which the process​ operates, C is the desired capacity cushion​ (expressed as a​ percent), Q is the number of units in each​ lot, and s is the setup time​ (in minutes) per lot. M=[Dp+(D/Q)s]Standard Model+[Dp+(D/Q)s]Super Model/N[1−(C/100)] The values​ D, p,​ C, and Q are given in the problem statement. The total number of minutes per year during which the process​ operates, N, must be calculated. To determine the value of​ N, recall that the process operates 8 hours a day for 350 days a year. N=168,000 Evaluate for M by substituting known values into the equation and simplifying. The solution is shown rounded up to the next whole number. M=[Dp+(D/Q)s]Standard Model+[Dp+(D/Q)s]Super ModelN[1−(C/100)] =[20,000(10)+(20,000/50)30]+[10,000(20)+(10,000/25)45]/ (168,000[1−(15/100))]=4 The value of M is equal to the number of machines​ Knott's currently​ has, 4.​ Therefore, Knott's does have sufficient capacity to meet annual demand. b. = [20,000(10)+(20,000/50)30]+[20,000(20)+(20,000/25)30]/ 168,000[1−(15/100)]=5 The value of M is greater than the number of machines​ Knott's currently​ has, 4.​ Therefore, Knott's would not have enough capacity to produce​ 20,000 units of each type of swing set.

The Dahlia Medical Center has 32 labor​ rooms, 18 combination labor and delivery​ rooms, and 3 delivery rooms. All of these facilities operate around the clock. Time spent in labor rooms varies from hours to​ days, with an average of about a day. The average uncomplicated delivery requires about one hour in the delivery room. During an exceptionally busy​ three-day period, 111 healthy babies were born at Dahlia Medical Center. 60 babies were born in separate labor and delivery rooms and 51 were born in combined labor and delivery rooms. Which of the facilities​ (labor rooms, combination labor and delivery​ rooms, or delivery​ rooms) had the greatest utilization​ rate? To determine which of the facilities​ (labor rooms, combination labor and delivery​ rooms, or delivery​ rooms) had the greatest utilization​ rate, use the formula below to compute the utilization rate for each of the facilities.

Utilization=Average output rate/ Maximum capacity× 100% ​First, find the maximum capacity of the 32 labor rooms. Note that these rooms operate 24 hours a day. The capacity of the labor​ rooms, in​ hours, for the​ three-day period is the product of 3​ days, 24​ hours/day, and the 32 ​rooms, which is equal to 2,304 hours. Find the utilization by dividing the total amount of time the labor rooms were used by the maximum​ capacity, 2,304 hours. Note that the labor rooms were used for 60 births and that an average birth uses a labor room for 24 hours. The solution is shown rounded to two decimal places. 62.50​% ​Next, find the maximum capacity of the 3 delivery rooms. Note that these rooms operate 24 hours a day. The capacity of the delivery​ rooms, in​ hours, for the​ three-day period is the product of 3​ days, 24​ hours/day, and the 3 ​rooms, which is equal to 216 hours. Find the utilization by dividing the total amount of time the delivery rooms were used by the maximum​ capacity, 216 hours. Note that the delivery rooms were used for 60 births and that an average birth uses a delivery room for 1 hour. The solution is shown rounded to two decimal places. 27.78​% ​Next, find the maximum capacity of the 18 combination labor and delivery rooms. Note that these rooms operate 24 hours a day. The capacity of the labor and delivery​ rooms, in​ hours, for the​ three-day period is the product of 3​ days, 24​ hours/day, and the 18 ​rooms, which is equal to 1,296 hours. Find the utilization by dividing the total amount of time the combination labor and delivery rooms were used by the maximum​ capacity, 1,296 hours. Note that the labor and delivery rooms were used for 51 births and that an average birth uses a labor and delivery room for 24 hours. The solution is shown rounded to two decimal places. 94.44​% ​Therefore, combination labor and delivery rooms had the greatest utilization rate.

Two different manufacturing processes are being considered for making a new product. The first process is less ​capital-intensive, with fixed costs of only $52,000 per year and variable costs of $710 per unit. The second process has fixed costs of $406,000 but variable costs of only $220 per unit. a. What is the​ break-even quantity, beyond which the second process becomes more attractive than the​ first? b. If the expected annual sales for the product is 745 units, which process would you​ choose?

a. The total cost of producing Q units of the product is given​ by: Total cost=F+c×Q​, where F is the fixed​ cost, c is the variable cost per​ unit, and Q is the volume produced. The production volume at which both manufacturing processes are indifferent can be solve​ from: F1+c1×Q=F2+c2×Q​, where F1, c1 are the fixed cost and variable cost per unit of manufacturing process​ one, and F2, c2 are the fixed cost and variable cost per unit of manufacturing process two. Solving for Q​, Q=F2−F1/(c1−c2)​, Q=$406,000−$52,000/($710−$220)=722 units. b. If the expected annual sales for the product is 820 ​units, which process would you​ choose? Since the production volume at which the second manufactuing process becomes more attractive is 722 units and the expected annual sales for the product is 820 ​units, you should choose the second manufactuing process.

Spartan Castings must implement a manufacturing process that reduces the amount of particulates emitted into the atmosphere. Two processes have been identified that provide the same level of particulate reduction. The first process is expected to incur $685,000 of fixed cost and add $35 of variable cost to each casting Spartan produces. The second process has fixed costs of $100,000 and adds $100 of variable cost per casting. a. What is the​ break-even quantity beyond which the first process is more​ attractive? b. What is the difference in total cost if the quantity produced is 5,000​?

a. The​ break-even quantity is the quantity for which the total costs for the two alternatives are equal. Let F1 equal the fixed cost for the first​ process, F2 equal the fixed cost for the second​ process, c1 equal the variable cost​ (per unit) for the first​ process, and c2 equal the variable cost​ (per unit) for the second process. First determine the total cost for each process depending on the​ quantity, Q. Total cost (process 1) =F1+c1Q=$685,000+$35Q Total cost (process 2) =F2+c2Q=$100,000+$100Q Having obtained the equations for the total cost of each​ process, find the​ break-even quantity,​ Q, by setting them​ equal: F1+c1Q=F2+c2Q $685,000+$35Q=$100,000+$100Q $65Q=$585,000 Q=9000 b.Use the obtained equations to find the total cost for each process given Q=5,000. Total cost (process 1)= F1+c1Q=$685,000+$35(5,000)=$860,000 Total cost (process 2) =F2+c2Q=$100,000+$100(5,000)=$600,000 Note that the total cost of process 1 is greater. Find the difference in total​ cost: The difference in total cost=$860,000-$600,000=$260,000.

Refer to the accompanying process chart for an automobile oil change. Complete parts​ (a) and​ (b) if: •The mechanic earns ​$42 per hour​ (including variable fringe​ benefits). •The process is performed twice per hour​ (on average). •The shop is open 325 days a​ year, 10 hours a day. •The mechanic does not get paid for idle time. •There can be only two cycles per hour regardless of the cycle time.

a. What is the total labor cost associated with the​ process? In this​ case, the total labor cost is equal to the wage rate per hour times the number of hours per oil change times the number of oil changes per year. ​First, compute the time it takes to complete one oil change using the information in the process chart. To do​ so, add up the times in the summary table. 16.5+5.5+5.0+0.7+0.3=28 min ​Now, determine the computation that is needed to find the total labor cost. As stated​ before, the total labor cost is equal to the wage rate per hour times the number of hours per oil change times the number of oil changes per year. In this​ case, the wage rate per hour is ​$42​/hr, the number of hours per oil change is​ (28 min/oil​ change)/(60 min/hr), and the number of oil changes per year is 2 oil ​changes/hr×10 ​hrs/day×325 ​days/yr. Therefore, the computation is the expression shown below.($42​/hr)[(28min/oil change)/(60​ min/hr)](2 oil ​changes/hr×10 ​hrs/day×325 ​days/yr) Complete the computation. ​($42​/hr)[(28min/oil change)/(60​ min/hr)](2 oil ​changes/hr×10 ​hrs/day×325 ​days/yr)=​$127,400​/yr ​Therefore, the total labor cost associated with the process is ​$127,400 per year. b.If steps​ 7, 10,​ 12, and 15 were​ eliminated, estimate the annual labor savings associated with implementing this new process. To answer this​ question, compute the total labor cost of these four steps. Use a similar computation as in part​ (a), only replace the total 28 minutes per oil change with the total time it takes to complete these four steps per oil change. Compute the time it takes to complete the four given steps using the information in the process chart. 0.90+0.60+0.70+0.50=2.7min ​Now, replace the total 28 minutes per oil change with the 2.7 minutes saved in the computation from part​ (a) and simplify. ($42​/hr)[(2.7min​ saved/oil change)/(60​ min/hr)](2 oil ​changes/hr×10 ​hrs/day×325 ​days/yr)=​$12,285​/yr Thus, if steps​ 7, 10,​ 12, and 15 were​ eliminated, the annual labor savings is ​$12,285.

Mackelprang, Inc., is in the initial stages of building the premier planned community in the greater​ Phoenix, Arizona, metropolitan area. The main selling point will be the​ community's lush golf courses. Homes with golf course views will generate premiums far larger than homes with no golf course​ views, but building golf courses is expensive and takes up valuable space that​ non-view homes could be built upon.​ Mackelprang, Inc., has limited land capacity. In order to maximize its​ profits, it is faced with a decision as to how many golf courses it should​ build, which in turn will impact how many homes with and without golf course views it will be able to construct.​ Mackelprang, Inc., realizes that this decision is directly related to the premium buyers will be willing to spend to buy homes with golf course views.​ Mackelprang, Inc., is required to build at least one golf​ course, but has enough space to build up to three golf courses.

compute expected payoff for The Island. Total revenue=0.2×$3.5+0.5×$2+0.3×$0.7=​$1.91 Expected Payoff=​$1.91− ​$1.5=​$410,000 Compute expected payoff for Wildwood. Total revenue=0.3×$7+0.4×$5.5+0.3×$0.7=​$4.51 Expected Payoff=​$4.51−​$4.8=−​$−290,000 Compute expected payoff for The Ranch. Total revenue=0.3×$5+0.5×$3.5+0.2×$0.7=​$3.39 Expected Payoff=​$3.39−​$3=​$390,000 ​Hence, Mackelprang,​ Inc., should build The Island and The Ranch courses. b.What is the expected payoff for this​ project? A combined payoff of two courses is $410,000+$390,000=​$800,000. ​Thus, Mackelprang Inc. should build The Island and The Ranch golf courses for a combined payoff of ​$800,000.