A small firm intends to increase the capacity of a bottleneck operation by adding a new machine.Two alternatives, A and B, have been identified, and the associated costs and revenues have beenestimated. Annual fixed costs would be $40,000 for A and $30,000 for B; variable costs per unitwould be $10 for A and $11 for B; and revenue per unit would be $15.c. If expected annual demand is 12,000 units, which alternative would yield the higher profit?

A small firm intends to increase the capacity of a bottleneck operation by adding a new machine.Two alternatives, A and B, have been identified, and the associated costs and revenues have beenestimated. Annual fixed costs would be $40,000 for A and $30,000 for B; variable costs per unitwould be $10 for A and $11 for B; and revenue per unit would be $15.c. If expected annual demand is 12,000 units, which alternative would yield the higher profit?

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter4: Linear Programming Models

Section4.8: Data Envelopment Analysis (dea)

Problem 42P

See similar textbooks

Similar questions

A small firm intends to increase the capacity of a bottleneck operation by adding a new machine.Two alternatives, A and B, have been identified, and the associated costs and revenues have beenestimated. Annual fixed costs would be $40,000 for A and $30,000 for B; variable costs per unitwould be $10 for A and $11 for B; and revenue per unit would be $15.b. At what volume of output would the two alternatives yield the same profit?
In a job shop, effective capacity is only 50 percent of design capacity, and actual output is80 percent of effective output. What design capacity would be needed to achieve an actual output c eight jobs per week?
Dr. Gulakowicz is an orthodontist. She estimates that adding two new chairs will increase fixed costs by $149,000, including the annual equivalent cost of the capital investment and the salary of one more technician. Each new patient is expected to bring in $3,040 per year in additional revenue, with variable costs estimated at $1,030 per patient. The two new chairs will allow Dr. Gulakowicz to expand her practice by as many as 205 patients annually. How many patients would have to be added for the new process to break even? Part 2 The break-even volume is enter your response here patients. (Enter your response rounded to the nearest whole number.)
A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $36,000 for A and $31,000 for B; variable costs per unit would be $7 for A and $11 for B; and revenue per unit would be $17.
Dr. Gulakowicz is an orthodontist. She estimates that adding two new chairs will increase fixed costs by $147,000, including the annual equivalent cost of the capital investment and the salary of one more technician. Each new patient is expected to bring in $2,970 per year in additional revenue, with variable costs estimated at $970 per patient. The two new chairs will allow Dr. Gulakowicz to expand her practice by as many as 190 patients annually. How many patients would have to be added for the new process to break even? patients. (Enter your response rounded to the nearest whole number.) The break-even volume is
The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. If, for this machine, design capacity is 50 cords per day, effective capacity is 40 cords per day, and actual output is anticipated to be 35 cords per day, what would be its utilization? 100 percent 80 percent 75 percent 70 percent 0 percent The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. If, for this machine, design capacity is 50 cords per day, effective capacity is 40 cords per day, and actual output is expected to be 32 cords per day, what would be its efficiency? 100 percent 80 percent 75 percent 70 percent 0 percent
Dr. Gulakowicz is an orthodontist. She estimates that adding two new chairs will increase fixed costs by $150,000, 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 $1,030 per patient. The two new chairs will allow Dr. Gulakowicz to expand her practice by as many as 215 patients annually. How many patients would have to be added for the new process to break even? (Enter your response rounded to the nearest whole number.)
A process currently services an average of 52 customers per day. Observations in recent weeks show that its utilization is about 90 percent, allowing for just a 10 percent capacity cushion. If demand is expected to be 85 percent of the current level in five years and management wants to have a capacity cushion of just 6 percent, what capacity requirement should be planned?
What happens to the capacity analysis when several tasks are being performed simultaneously?
Monique Food Processing Company produces light snacks that can be heated in a microwave. The following steps are included in the process: Steps Description Capacity (Units/Hour) 1 Prepare food 200 2 Measure and place in plastic pouch 175 3 Prepare cardboard box 200 4 Insert pouch into box 300 5 Shrink-wrap box 200 What are the key factors that determine when to add capacity? Why would an organization want to reduce its capacity?
A process currently services an average of 42 customers per day. Observations in recent weeks show that its utilization is about 90 percent, allowing for just a 10 percent capacity cushion. If demand is expected to be 60 percent of the current level in five years and management wants to have a capacity cushion of just 4 percent, what capacity requirement should be planned? The needed capacity requirement is ____________________ customers per day. (Enter your response rounded up to the next whole number.)
Dr. Gulakowicz is an orthodontist. She estimates that adding two new chairs will increase fixed costs by $150,000, including the annual equivalent cost of the capital investment and the salary of one more technician. Each new patient is expected to bring in $3,000 per year in additional revenue, with variable costs estimated at $1,000 per patient. The two new chairs will allow Dr. Gulakowicz to expand her practice by as many as 200 patients annually. How many patients would have to be added for the new process to break even?