8. Emily needs to estimate the annual labor and material cost for a new facility. The dataobtained wereLabor cost index was 120 ten years ago and 190 today. Annual labor cost for a similarproduction facility was $602,004 ten years ago. Material cost index was 544 four years ago and712 today. Annual material cost for a similar production facility was $2,455,000 four years ago.Estimate the annual labor cost and annual material cost for the new facility.

This question is related to the topic-project management and this topic falls under the operations…

Answered: 8. Emily needs to estimate the annual…

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

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. Manager T. C. Downs of Plum Engines, a producer of lawn mowers and leaf blowers, must developan aggregate plan given the forecast for engine demand shown in the table. The department has aregular output capacity of 130 engines per month. Regular output has a cost of $60 per engine. Thebeginning inventory is zero engines. Overtime has a cost of $90 per engine.a. Develop a chase plan that matches the forecast and compute the total cost of your plan. Regularproduction can be less than regular capacity. b. Compare the costs to a level plan that uses inventory to absorb fluctuations. Inventory carryingcost is $2 per engine per month. Backlog cost is $90 per engine per month. There should not bea backlog in the last month.MONTH1 2 3 4 5 6 7 8 TotalForecast 120 135 140 120 125 125 140 135 1,040
Spectrum Hair Salon is considering expanding itsbusiness, as it is experiencing a large growth. Th e question iswhether it should expand with a bigger facility than needed,hoping that demand will catch up, or with a small facility,knowing that it will need to reconsider expanding in three years.Th e management at Spectrum has estimated the followingchances for demand:• Th e likelihood of demand being high is 0.70.• Th e likelihood of demand being low is 0.30.Estimated profi ts for each alternative are as follows:• Large expansion has an estimated profi tability of either$100,000 or $70,000, depending on whether demand turnsout to be high or low.• Small expansion has a profi tability of $50,000, assuming thatdemand is low.• Small expansion with an occurrence of high demand wouldrequire considering whether to expand further. If thebusiness expands at this point, the profi tability is expected tobe $90,000. If it does not expand further, the profi tability isexpected to be $60,000.
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Spectrum Hair Salon is considering expanding itsbusiness, as it is experiencing a large growth. Th e question iswhether it should expand with a bigger facility than needed,hoping that demand will catch up, or with a small facility,knowing that it will need to reconsider expanding in three years.Th e management at Spectrum has estimated the followingchances for demand:• Th e likelihood of demand being high is 0.70.• Th e likelihood of demand being low is 0.30.Estimated profi ts for each alternative are as follows:• Large expansion has an estimated profi tability of either$100,000 or $70,000, depending on whether demand turnsout to be high or low.• Small expansion has a profi tability of $50,000, assuming thatdemand is low.• Small expansion with an occurrence of high demand wouldrequire considering whether to expand further. If thebusiness expands at this point, the profi tability is expected tobe $90,000. If it does not expand further, the profi tability isexpected to be $60,000.Draw a…
4.) After 10 years of production, the chemical manufacturing plant has become very successful. Because of its success, a great demand for products came as many consumers wanted the company to sell them their products. To meet the demand, three alternatives were considered. Work overtime to meet demands. Annual overtime expenses are $500,000. Expand the plant to accommodate more production. Fixed annual expenses are $2,500,000. Make a contract with another company to produce additional products at a rate of $1,000,000. The cost of manufacturing products from the three alternatives are $3500, $3000 and $3250 per unit respectively. The plant sells every unit made regardless of how they were made at $15,000 per unit. The expected demand for the product is 150 units with a probability of 50% 250 units with a probability of 35% 350 units with a probability of 7.5% 400 units with a probability of 5% 500 units with a probability of 2.5%
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Variable cells Cell Name Final Value Reduced Cost Objective Coefficient Allowable Increase Allowable Decrease $B$6 Activity 1 0 425 500 1E+30 425 $C$6 Activity 2 27.5 0.0 300 500 300 $D$6 Activity 3 0 250 400 1E+30 250 Constraints Cell Name Final Value Shadow Price Constraint R.H. Side Allowable Increase Allowable Decrease $E$2 Benefit A 110 0 60 50 1E+30 $E$3 Benefit B 110 75 110 1E+30 46 $E$4 Benefit C 137.5 0 80 57.5 1E+30 If the coefficient for Activity 1 in the objective function changes to $50, then the objective function value: Multiple Choice will decrease by $450. is $0. will decrease by $2750. will remain the same. can only be discovered by resolving the problem.
Summertime Products makes outdoor shirts. Data relating to the coming year’s planned operations follows: Sales (200,000 shirts) P 5,000,000 Cost of good sold 3,500,000 Gross profit P 1,500,000 Selling and administrative expenses 1,100,000 Income P 400,000 The factory has capacity to make 240,000 shirts per year. Fixed cost included in cost of goods sold was P 1,000,000. The only variable selling, general, and administrative expenses are a 10% sales commission and a P 2.00 per shirt licensing fee paid to the designer. A chain store manager has approached the sales manager of Summertime Products offering to buy 30,000 shirts at P18 per shirt. These shirts would be sold in areas where Summertime’ shirts are not now sold. The sales manager believes that the accepting the offer would result in a loss because the average total cost of a shirt is P 23 ([3,500,000+P 1,100,000]/200,000). He feels that even though sales commissions would not be paid on the order, a loss would still result.…
Techno Corporation is currently manufacturing an item atvariable costs of $5 per unit. Annual fixed costs of manufac-turing this item are $140,000. The current selling price ofthe item is $10 per unit, and the annual sales volume is30,000 units.a. Techno can substantially improve the item’s quality byinstalling new equipment at additional annual fixed costsof $60,000. Variable costs per unit would increase by $1,but, as more of the better-quality product could be sold,the annual volume would increase to 50,000 units. ShouldTechno buy the new equipment and maintain the currentprice of the item? Why or why not?b. Alternatively, Techno could increase the selling price to$11 per unit. However, the annual sales volume wouldbe limited to 45,000 units. Should Techno buy the newequipment and raise the price of the item? Why orwhy not?
explain how the analysis would change if office space were in high demand.
What are demand forecasting and capacity strategy? Give an example of demand forecasting for a business.
2a. An analysis of Revere Beach Corporation's operating income changes between 2021 and 2022 show the following: Operating income for 2021 $4,750,000 Add growth component 180,000 Deduct price-recovery component (60,000) Add productivity component 285,000 Operating income for 2022 $5,155,000 Required: Is Revere's operating income gain consistent with the product differentiation or cost leadership strategy? Explain briefly. 2b. An analysis of Terbolt Corporation's operating income changes between 2021 and 2022 show the following: Operating income for 2021 $4,750,000 Add growth component 75,000 Add price-recovery component 398,000 Deduct productivity component (50,000) Operating income for 2022…

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