A small company heats its building using a gas furnace. It expects to spend $9,020 on natural gas this first year. The cost of the natural gas is expected to increase by 10% per year every subsequent year. There is also the maintenance. cost on the gas furnace which is expected to be $920.00 in the first year and to increase by 15% per year every subsequent year. The planning horizon is 15 years and the company uses an annual interest rate of 20% for economic analysis of its investments. (a) The projected annual cost of natural gas in year 15 is $ 34,253 (Round to nearest dollar) (b) The projected annual maintenance cost of the furnace in year 15 is $ 6510 (Round to nearest dollar) (c) The total present worth of operating and maintaining the furnace over the 15 years is $(Round to nearest dollar)

A small company heats its building using a gas furnace. It expects to spend $9,020 on natural gas this first year. The cost of the natural gas is expected to increase by 10% per year every subsequent year. There is also the maintenance. cost on the gas furnace which is expected to be $920.00 in the first year and to increase by 15% per year every subsequent year. The planning horizon is 15 years and the company uses an annual interest rate of 20% for economic analysis of its investments. (a) The projected annual cost of natural gas in year 15 is $ 34,253 (Round to nearest dollar) (b) The projected annual maintenance cost of the furnace in year 15 is $ 6510 (Round to nearest dollar) (c) The total present worth of operating and maintaining the furnace over the 15 years is $(Round to nearest dollar)

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 63P: It costs a pharmaceutical company 75,000 to produce a 1000-pound batch of a drug. The average yield...

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It costs a pharmaceutical company 75,000 to produce a 1000-pound batch of a drug. The average yield from a batch is unknown but the best case is 90% yield (that is, 900 pounds of good drug will be produced), the most likely case is 85% yield, and the worst case is 70% yield. The annual demand for the drug is unknown, with the best case being 20,000 pounds, the most likely case 17,500 pounds, and the worst case 10,000 pounds. The drug sells for 125 per pound and leftover amounts of the drug can be sold for 30 per pound. To maximize annual expected profit, how many batches of the drug should the company produce? You can assume that it will produce the batches only once, before demand for the drug is known.
A company is operating in two unrelated businesses. The first one is making common salt, which is sold in one kilogram consumer packs. The second business is making readymade garments. The owner of the businesses has decided to implement Materials Requirement Planning (MRP) in one of the two businesses, which is likely to give him greater benefit. Assuming that the current turnover and profits of both the units are comparable, compare the relative benefits and limitations of Materials Requirement Planning (MRP) for these two businesses.
The annual maintenance costs of a machine that has been in use for 3 years are 300 TL, 350 TL and 375 TL, respectively. The machine is expected to be available for 8 years after purchase. The maintenance costs foreseen for the coming years are 400 TL in the first year and 150 TL in the following years. If the machine is sold today, it can be sold for 1500 TL, and in the following years for 1000 TL. What is the optimum regeneration time of the machine if the MCVO is 10%?
Aqua Man Company manufactures and sells a single product. Planned and actual production in its first year of operation was 100,000 units. Planned and actual costs for the year were as follows: Manufacturing Non-manufacturing Variable P600,000 P500,000 Fixed P400,000 P300,000 The company sold 85,000 units of product at a selling price of P30 per unit. Using absorption costing, the company’s operating profit was Select one: a. P1,020,000 b. P975,000 c. P900,000 d. P750,000
The Woodruff Corporation purchased a piece of equipment three years ago for $211,000. It has an asset depreciation range (ADR) midpoint of eight years. The old equipment can be sold for $89,000. A new piece of equipment can be purchased for $321,500. It also has an ADR of eight years. Assume the old and new equipment would provide the following operating gains (or losses) over the next six years. Old equ 26,250 14,750 9,500 6,000 5,500 -6,500 The firm has a 25 percent tax rate and a 9 New equipment 81,000 74,500 70,750 61,250 51,500 46,750 year 1 4 percent cost of capital. What is the net cost of the new equipment? Round your solution to two decimal places. What is the present value of incremental benefits? Round your solution to two decimal places. What is the NPV of this replacement decision? Round your solution to two decimal places.
Managers at the Dew Drop Inn are concerned about the in-creasing number of guests who make reservations but fail toshow up. They have decided to institute a policy of over-booking like larger hotel chains. The profit from a payingguest averages $50 per room per night. The cost of puttingup a guest at another hotel is $100 per room per night.Records show the following number of no-shows over thepast three months:How many rooms should Dew Drop overbook? No-Shows Frequency0 181 362 273 9
Suppose you are senior production manager of a company which produces beverage (carbonated soft drinks) of all flavors. The company is operating since 10 years. You and your production team follow all of the SOP’s (Standard operating procedures) while producing the beverage. You have noticed that while producing the beverage for the 1st quarter of 2021 the artificial color added to beverage is little intensive as compare to previous productions. Artificial color used in limited proportion doesn’t not harm the health of consumers but this time it is accidentally little intensive which can have some side effects. Q1) As a senior production manager what managerial actions you should take to control the situation? Q2) What do you think can be the consequences if correct managerial action is not taken on time?
Suppose you are senior production manager of a company which produces beverage (carbonated soft drinks) of all flavors. The company is operating since 10 years. You and your production team follow all of the SOP’s (Standard operating procedures) while producing the beverage. You have noticed that while producing the beverage for the 1st quarter of 2021 the artificial color added to beverage is little intensive as compare to previous productions. Artificial color used in limited proportion doesn’t not harm the health of consumers but this time it is accidentally little intensive which can have some side effects. Q1) As a senior production manager what managerial actions you should take to control the situation?
Suppose you are senior production manager of a company which produces beverage (carbonated soft drinks) of all flavors. The company is operating since 10 years. You and your production team follow all of the SOP’s (Standard operating procedures) while producing the beverage. You have noticed that while producing the beverage for the 1st quarter of 2021 the artificial color added to beverage is little intensive as compare to previous productions. Artificial color used in limited proportion doesn’t not harm the health of consumers but this time it is accidentally little intensive which can have some side effects. What do you think can be the consequences if correct managerial action is not taken on time?
A company is planning to launch a new product. It currently has four possible new products under consideration to invest in but it must select one. It has estimated the following data: Product Expected annual demand Unit cost of production Unit selling price Fixed cost incurred before production Expected product life in years A 500 Product B Product A Product C Product D £700 £900 £150,000 2 years B 700 £900 £1300 £350,000 2.5 years C 850 £1000 £1400 £450,000 3 years D 1000 £1200 £1500 £550,000 3.25 years On the basis that the main selection criterion is the product that offers the largest safety margin between break even quantity and expected product life select the safest product to invest in.
The owners of a small manufacturing concern have hired a vice president to run the company with the expectation that he will buy the company after five years. Compensation of the new vice president is a flat salary plus 75% of the first $150,000 profit, and then 10% of profit over $150,000. Purchase price for the company is set at 4.5 times earnings (profit), computed as average annual profitability over the next five years. a.Plot the annual compensation of the vice president as a function of annual profit. b.Assume the company will be worth $10 million in five years. Plot the profit of buying the company as a function of annual profit. c.Does this contract align the incentives of the new vice president with the profitability goals of the owners?
Hoping to increase the chances of reaching a performance goal, the director of a research project has assigned three separate research teams the same task. The director estimates that the team probabilities are 0.9, 0.8, and 0.7 for successfully completing the task in the allotted time. Assuming that the teams work independently, what is the probability that the task will not be completed in time?