Ops Management HW 8 Ch 7S
Christopher's Cranks uses a machine that can produce 100 cranks per hour. The firm operates 12 hours per day, five days per week. Due to regularly scheduled preventative maintenance, the firm expects the machine to be running during approximately 95 % of the available time. Based on experience with other products, the firm expects to achieve an efficiency level for the cranks of 85 %. What is the expected weekly output of cranks for this company? 4845 5700 6783 969 5100
4845
A shop wants to increase capacity by adding a new machine. The firm is considering proposals from vendor A and vendor B. The fixed costs for machine A are $90,000 and for machine B are $75,000. The variable cost for A is $15.00 per unit and for B $18.00 per unit. The revenue generated by the units processed on these machines is $22 per unit. If the estimated output is 9,000 units, which machine should be purchased? No purchase because neither machine yields a profit at that volume Machine A Machine B Either machine A or machine B Purchase both machines since they are both profitable
No purchase because neither machine yields a profit at that volume
Effective capacity is the a. maximum output of a system in a given period b. capacity a firm expects to achieve given the current operating constraints c. average output that can be achieved under ideal conditions d. minimum usable capacity of a particular facility e. sum of all of the organization's input
b. capacity a firm expects to achieve given the current operating constraints
Net present value ignores the time value of money is sales volume less sales and excise taxes is the discounted value of a series of future cash receipts is gross domestic product less depreciation is profit after taxes
is the discounted value of a series of future cash receipts
A capacity alternative has an initial cost of $50,000 and cash flow of $20,000 for each of the next four years. If the cost of capital is 5 percent, the net present value of this investment is impossible to calculate, because variable costs are not known greater than $80,000 greater than $130,000 impossible to calculate, because no interest rate is given less than $30,000
less than $30,000
Design capacity is the maximum theoretical output of a system in a given period under ideal conditions average output that can be achieved under ideal conditions maximum usable capacity of a particular facility capacity a firm expects to achieve given the current operating constraints actual production over a specified time period
maximum theoretical output of a system in a given period under ideal conditions
Adding a complimentary product to what is currently being produced is a demand management strategy used when the existing product has seasonal or cyclical demand price increases have failed to bring about demand management capacity exceeds demand for a product which has stable demand efficiency exceeds 100 percent demand exceeds capacity
the existing product has seasonal or cyclical demand
Break-even is the number of units at which total revenue equals total variable cost total revenue equals total cost total profit equals total cost total revenue equals price times quantity total revenue equals total fixed cost
total revenue equals total cost
Basic break-even analysis typically assumes that variable costs and revenues increase in direct proportion to the volume of production costs increase in direct proportion to the volume of production, while revenues increase at a decreasing rate as production volume increases because of the need to give quantity discounts Both costs and revenues are made up of fixed and variable portions revenues increase in direct proportion to the volume of production, while costs increase at a decreasing rate as production volume increases All of the above are assumptions in the break-even model
variable costs and revenues increase in direct proportion to the volume of production
