A firm that assembles refrigerators and stoves is about to start production of new models of each. Each model will require assembly time, inspection time, and storage space. The amounts of cach of these resources that can be devoted to the production of the items is limited. The manager of the firm would like to determine the quantity of each item to produce in order to maximize the profit generated by sales. He has the following data at his disposal:
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- Hudson Corporation is considering three options for managing its data warehouse: continuing with its own staff, hiring an outside vendor to do the managing, or using a combination of its own staff and an outside vendor. The cost of the operation depends on future demand. The annual cost of each option (in thousands of dollars) depends on demand as follows: If the demand probabilities are 0.2, 0.5, and 0.3, which decision alternative will minimize the expected cost of the data warehouse? What is the expected annual cost associated with that recommendation? Construct a risk profile for the optimal decision in part (a). What is the probability of the cost exceeding $700,000?The jarvis corporation produces bucket loader assemblies for the tractor industry. The product has a long term life expectancy. Jarvis has a traditional manufacturing and inventory system. Jarvis is considering the installation of a just-in-time inventory system to improve its cost structure. In doing a full study using its manufacturing engineering team as well as consulting with industry JIT experts and the main vendors and suppliers of the components Jarvis uses to manufacture the bucket loader assemblies, the following incremental cost-benefit relevant information is available for analysis: The Jarvis cost of investment capital hurdle rate is 15%. One time cost to rearrange the shop floor to create the manufacturing cell workstations is $275,000. One time cost to retrain the existing workforce for the JIT required skills is $60,000. Anticipated defect reduction is 40%. Currently there is a cost of quality defect assessment listed as $150,000 per year. The setup time for…CleanTech manufactures equipment to mitigate the environmental effects of waste. (a) If Product A has fixed expenses of $15,000 per year and each unit of product has a $0.20 variable cost, and Product B has fixed expenses of $5000 per year and a $0.50 variable cost, at what number of units of annual production will A have the same overall cost as B? (b) As a manager at CleanTech what other data would you need to evaluate these two products?
- The production department is proposing the purchase of an automatic insertion machine. It has identified three machines and has asked the accountant to analyze them to determine which one has the best average rate of return. Machine A Machine B $45,730.58 $60,103.80 326,647.00 200,346.00 Ca, Machines B and C have the same preferred average rate of return b. Machine C C. Machine 11 d. Machine A Estimated average income Average investment Machine C $74,639.55 497,597.00Vice President for Sales and Marketing at Waterways Corporation is planning for production needs to meet sales demand in the coming year. He is also trying to determine how the company's profits might be increased in the coming year. This problem asks you to use cost-volume-profit concepts to help Waterways understand contribution margins of some of its products and decide whether to mass-produce any of them. Waterways markets a simple water control and timer that it mass-produces. Last year, the company sold 735,000 units at an average unit selling price of $3.60. The variable costs were $1,852,200, and the fixed costs were $508,032.Tell what life-cycle cost management is and how it can be usedto maximize profits over a product's life cycle.Nico Parts, Inc., produces electronic products with short life cycles (of lessthan two years). Development has to be rapid, and the profitability of theproducts is tied strongly to the ability to find designs that will keep production and logistics costs low. Recently, management has also decided that postpurchase costs are important in design decisions. Last month, a proposal for a new product was presented to management. The total market was projected at 200,000 units (for the two-year period). The proposed selling price was $130 per unit. At this price, market share was expected to be 25 percent. The manufacturing and logistics costs were estimated to be $120 per unit. Upon reviewing the projected figures, Brian Metcalf, president of Nico, called in his chief design engineer, Mark Williams, and his marketing manager, CathyMcCourt. The following conversation was recorded:…
- Russ has developed a new device, which he hopes to produce and market on a large scale. Russ will rent a production space for P500 per month and rent production equipment for P800 per month. Russ estimates the material cost per unit will be P5 and the labour cost per unit, P3. Advertising and promotion will cost P900 per month. He will hire workers and spend his time promoting the product. Advertising and promotion is a? a. Variable product cost b. fixed product costc. fixed period costd. variable period costBurger Office Equipment produces two types of desks, standard and deluxe. Deluxe desks have oak tops and more expensive hardware and require additional time for finishing and polishing. After reviewing the hardware and labor required along with the profit for each model, Burger Office Equipment found the following linear optimization model for profit, where S is the number of standard desks produced and D is the number of deluxe desks produced. Implement the linear optimization model on a spreadsheet and use Solver to find an optimal solution. Interpret the optimal solution, identify the binding constraints, and verify the values of the slack variables. Maximize Profit=240 S+350 D 65 S+45 D≤6000 20 D≤ 800 (Availability of pine) 9 S+18 D≤500 S≥0 and D≥0 (Availability of oak) (Availability of labor) Implement the linear optimization model and find an optimal solution. Interpret the optimal solution. The optimal solution is to produce standard desks and deluxe desks. This solution gives…Tell what life-cycle cost management is and how it can be usedto maximize profits over a product's life cycle.Nico Parts, Inc., produces electronic products with short life cycles (of lessthan two years). Development has to be rapid, and the profitability of theproducts is tied strongly to the ability to find designs that will keep production and logistics costs low. Recently, management has also decided that postpurchase costs are important in design decisions. Last month, a proposal for a new product was presented to management. The total market was projected at 200,000 units (for the two-year period). The proposed selling price was $130 per unit. At this price, market share was expected to be 25 percent. The manufacturing and logistics costs were estimated to be $120 per unit. Upon reviewing the projected figures, Brian Metcalf, president of Nico, called in his chief design engineer, Mark Williams, and his marketing manager, CathyMcCourt. The following conversation was recorded:…
- A new product is being designed by an engineering team at Golem Security. Several managers and employees from the cost accounting department and the marketing department are also on the team to evaluate the product and determine the cost using a target costing methodology. An analysis of similar products on the market suggests a price of $132.00 per unit. The company requires a profit of 0.20 of selling price. How much is the target cost per unit? Round to two decimal places.A company is planning to manufacture computer desks. The fixed cost will be $60,000 and it will cost $200 to produce each desk. Each desk will be sold for $450. a. Write the cost function, C, of producing x desks. b. Write the revenue function, R, from the sale of x desks. c. Determine the break-even point. Describe what thisAssume that the operations manager of a small semi-conductor manufacturer wants to run a Simulation model to better understand the uncertainties related to cost and demand for a particular product. He assumes that the total cost per month could be anywhere between $150,000 and $200,000 with equal likelihood. He also assumes that the demand is normally distributed with a mean of 5,000 items per month and a standard deviation of 1,000. Each item is sold for $95. a) Use the random numbers in the following table to simulate the costs, revenues and profits per month. Use Random Number A to generate the costs and Random Number B to generate the revenues per month and then calculate the profit as the difference between revenues and costs. Complete the table by reporting the minimum, maximum and average profit per month according to this simulation. Trial 1 2 3 4 5 6 7 8 9 10 you b) Can Random A 0.23 you 0.04 0.14 0.07 0.03 0.67 0.26 0.03 0.83 0.32 Cost Random B 0.75 0.89 0.82 0.33 0.96 0.67…