Zen product wants to decide whether to make-or buy an accessory item for one of ther products. It is projected that this item will sell for 515 each If the item is outsourced, there is virtually no cost other than the $6 per unit that they would pay their supplier. Internally, they have two choices Process A requires an investment of $120,000 for design and equipment, but results in a $4 per unit cost. Process B requees only a $100,000 investment, but its per unit cost is $5. Regardless of whether the item is subcontracted or produced internally, there is a 50% chance that they will sell 0.000 units, and a 50% chance that they will sell 100,000 units Draw the decision tree approptiate to the alternatives and outcomes stated. Using decision trees and EMV, what is their best choice? Zen product wants to decide whether to make-or buy an accessory item for one of ther products. It is projected that this item will sell for 515each If the item is outsourced, there is virtually no cost other than the $6 per unit that they would pay their supplier. Internally, dhey havetwo choices Process A requires an investment of $120,000 for design and equipment, but results in a $4 per unit cost Process B requaesonly a $100,000 investment, but its per unit cost is $5. Regardless of whether the item is subcontracted or produced internally, there is a 50%chance that they will sell (9.000 units, and a 50% chance that they will sell 100,000 units Draw the decision tree approprate to thealternatives and outcomes stated. Using decsion trees and EMV, what is their best choice?

Answered: Image /qna-images/answer/eae7b2ec-8b3e-4a28-87ed-a9550942c57b.jpg

Zen product wants to decide whether to make-or-buy an accessory item for one of their products. It is projected that ths item will sell for S1S each If the item is outsourced, there is virtually no cost other than the $6 per unit that they would pay their supplier. Internally, they have two choices Process A requires an investment of $120,000 for design and equipment, but results in a $4 per unit cost Process B requaes only a $100,000 investment, but its per unit cost is $5. Regardless of whether the item is subcontracted or produced internally, there is a 50% chance that they will sell (0.000 units, and a 50% chance that they will sell 100,000 units Draw the decision tree appropriate to the alternatives and outcomes stated. Using decision trees and EMV, what is their best choice? 15

Zen product wants to decide whether to make-or-buy an accessory item for one of their products. It is projected that ths item will sell for S1S each If the item is outsourced, there is virtually no cost other than the $6 per unit that they would pay their supplier. Internally, they have two choices Process A requires an investment of $120,000 for design and equipment, but results in a $4 per unit cost Process B requaes only a $100,000 investment, but its per unit cost is $5. Regardless of whether the item is subcontracted or produced internally, there is a 50% chance that they will sell (0.000 units, and a 50% chance that they will sell 100,000 units Draw the decision tree appropriate to the alternatives and outcomes stated. Using decision trees and EMV, what is their best choice? 15

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

See similar textbooks

Similar questions

Adidas is an athletic company designs and manufacturesseveral athletic things. Football is one of the company'sproducts that sells for $40 per unit. Total fixed costs relatedto the manufacturing of the football are $150,000 per monthand variables costs involved in manufacturing are $ 15 perunit. 1- Compute the break- even point of the football in unitsand dollars?
A manufactures the chairs. Manufacturing costs are expected to be £120 per chair, consisting of 70% variable costs and 30% fixed costs. The company has surplus capacity available. A's policy is to add a 60% profit margin to full costs. A large restaurants chain is going to replace the chairs in all branches. A is invited to submit a bid to the restaurant's chain. What is the lowest price per chair. A should bid on this long-term order? 1. £24,000 2. £14,400 3. £16,800 4. £38,400
the price ôf b. What Is the breakeve reduces the amount of particulates emitted into the . c. What other considera 8. Techno Corporation is c variable costs of $5 per turing this item are $14 the item is $10 per unit 30,000 units. ble cost to each casting Spartan produces. The second pro- bas fixed costs of $150,000 and adds $90 of variable cost per casting. What is the break-even quantity beyond which the first a. Techno can substa process is more attractive? What is the difference in total cost if the quantity installing new equ of $60,000. Variab! but, as more of the the annual volum produced is 10,000? Techno buy the n price of the item A A news clipping service is considering modernization. Rather Ahan manually clipping and photocopying articles of inter- est and mailing them to its clients, employees electronically input stories from most widely circulated publications into a database. Each new issue is searched for key words, such as a client's company name, competitors' names,…
Pranuec Company mai Tactures, assembles, and rebunds material handing equipment used Tn war ses and uistr iters. One product, called a Liftmaster, is assembled from four components: a frame, a motor, two supports, and a metal strap. Frandec's production schedule calls for 6000 Liftmasters to be made next month. Frandec purchases the motors from an outside supplier, but the frames, supports, and straps may be either manufactured by the company or purchased from an outside supplier. Manufacturing and purchase costs per unit are shown. Component Manufacturing Cost Purchase Cost Frame $39.00 $52.00 Support $12.50 $16.00 Strap $7.50 $8.50 Three departments are involved in the production of these components. The time (in minutes per unit) required to process each component in each department and the available capacity (in hours) for the three departments are as follows: Department Component Cutting Milling Shaping Frame 3.6 2.3 3.2 Support 1.4 1.8 2.7 Strap 0.9 1.8 Capacity (hours) 370 430…
DBS is also expecting the demand for its top-of-the range devices to increase further from the next year. Given the increase in annual requirement, the production manager is contemplating to start manufacturing the special components in-house to save costs rather than sourcing them from outside. Given the current purchase price of $9000 per unit, what will the average annual requirement need to be in order to justify making the components in-house if the variable cost of making is $6750 per unit and an upfront fixed cost of $55,000,000 is needed to procure the necessary plant and equipment? However, in the event that the expected increase in demand does not materialize and the demand is actually forecast to drop to 20,000 units next year, then what will be the maximum price per unit that DBS would be willing to pay to the supplier in order to continue buying from them? Going forward, if it is found to be a better decision to make the components in-house, DBS will then need to…
pls help me Blazerauto inc is considering whether to produce a new line of car. The company estimates that the variable cost for each car to be manufactured and sold is 10000 and fixed cost per year is 720000. The selling price is 25,000 per car. The supplier that provides the seats for the cars has a maximum yearly production capacity of 20,000. What is the Output, decision variable, parameters, and constraints? What is the break even point for blazerauto?
Scatter Diagrams and High-Low Cost Estimation Assume the local Pearle Vision has the following information on the number of sales orders received and order-processing costs. Month Sales Orders Order-Processing Costs 3,000 $ 165,400 1,500 100,750 4,400 241,400 2,800 163,800 2,300 139,550 1,200 86,200 2,000 125,000 1 2 3 4 5 6 7 Required (a.) Use information from the high- and low-volume months to develop a cost-estimating equation for monthly order-processing costs. $ 28,000 + $48.5 X (b.) Plot the data on a scatter diagram. Using the information from representative high-and low-volume months, develop a cost estimating equation for monthly order-processing costs. If needed, an Excel worksheet is provided in the following link in order to create the scatter diagram: Scatter_Diagram $ 15,000 X+ $53.14 X X
Gary’s Seasoning wants to increase its capacity by adding more blending and packagingmachines. Two vendors have presented proposals. Vendor A’s equipment costs $11,500 and the variable cost per unit is $2.00. Vendor B’s equipment costs $13,500 and the variable cost per unit is $1.75. Selling price for each seasoning packet for $4.00.a. What is the break-even point for each proposal?b. If the expected volume is 7,500 packages, which vendor should be chosen? (Show all calculations to earn full credit)
THSHT Pritchett's Precious Time Pieces PATOG Bill's company, Pritchett's Precious Time Pieces, buys, sells, and repairs old clocks and clock parts. Bill sells rebuilt springs for a price per unit of $10. The fixed cost of the equipment to build the springs is $1,000. The variable cost per unit is $5 for spring material. Required: Create a quantitative analysis model to determine the company's profit, and answer the following: 1. How much would the company's profit/(loss) be if they were unable to sell anything? 2. How much would the company's profit/(loss) be if they sold 400 units? 3. How many units do the company need to sell to break-even?
Franklin Company makes fine jewelry that it sells to department stores throughout the United States. Franklin is trying to decide which of the two bracelets to manufacture. Cost data pertaining to the two choices follow. Bracelet A Bracelet B Cost of materials per unit Cost of labor per unit Advertising cost per year Annual depreciation on existing equipment %24 30 37 43 43 8,800 6,500 7,700 5,900 Required a. Identify the fixed costs and determine the amount of fixed cost for each product. b. Identify the variable costs and determine the amount of variable cost per unit for each product. c. Identify the avoidable costs and determine the amount of avoidable cost for each product.
Hermes Hospitals Group (HHG) provides a private hospital medical services to private clients and company employees who are members of their insurance scheme. Service Heads coordinate and organize the medical services provided using Medical Consultants and their own theatre staff and nurses. Each medical procedure or service has a standard price and costs are carefully controlled by benchmarking against the NHS using industrial intelligence. A further 10% in costs is allowed based on the goal to improve the customer's experience by providing more nursing and consumables such as towels, şlippers and other comforts. Customers (patients) are given a risk assessment and the medical procedure or service is undertaken on a fixed price basis, subject to major alterations in the service provided. e HHG prides itself in providing a reliable, high quality service using the latest medical techniques and highly competent Consultant surgeons. Longer term, HHG would like to have a full complement of…
Julia Martin is the production manager of a ready to wear manufacturing outfit. A decision needs to be made about the type of clothing material or fabric to be used to make a shirt. The fabric that has been used in the previous production cost P 40 per yard but it is not available currently. Similar material from another supplier will cost P 50 per yard. Required: Identify all costs that you can see in the Julia Martin problem. Explain simply why you classified it as such.