Related questions
MR is a manufacturer of industrial fridges, freezers, and air conditioners. In December, the production
planner needs to submit a production plan to the plant manager for the next year. The aggregate
each quarter of next year is Q1: 14,800; Q2: 26,400; Q3: 35,000, and Q4: 19,200 units. The beginning inventory
in January is 0, and the year-end inventory in December of next year can be 0. It costs MR $24 to hold an
appliance in inventory for one quarter. Shortages are undesirable. Assume that all shortage will be backordered, and that back-order cost is $100 per unit per quarter. There are 160 permanent workers who produce
19,200 units per quarter. In busy quarters, workers can produce up to 9,600 additional units during overtime.
Regular time labour cost is $60 per unit appliance and overtime labour cost is $83 per unit. MR can hire up to
160 temporary workers for a second shift. Assume temporary workers have the same productivity and can
produce up to 19,200 units per quarter. A unit produced by temporary workers also costs $60 in labour cost.
However, there will be an extra hiring cost of $25 per unit during the first quarter of employment.
a. If permanent workers are used for the next four quarters during regular time, how many units will MR be
short at the end of the year and in which quarters?
b. Meet units short by hiring temporary workers. Use trade-off analysis to choose the minimum cost plan in
this case. (Hint: Hire approximately 78 temps for two quarters starting in Q2.)
c. Would using overtime (in addition to some temporary production) be less expensive? Use trade-off analysis
to choose the overall minimum cost plan. (Hint: Hire approximately 38 temps for two quarters starting in Q2,
supplemented with overtime.)
Step by stepSolved in 2 steps
- Suzy's Temporary Employee (STE) business, located in a big city, can do an online criminal background check in-house for $3.38 per search with a fixed cost of $28,000. A third-party online security firm offered to do a similar security search for $9.50 per person with an annual service contract with STE. If STE's forecast is 2,700 searches next year, should STE continue to do the search in-house or accept the third-party offer? Use the Excel template Break-Even to determine the best decision. Round your answer for the breakeven quantity to the nearest whole number and round your answer for the amount of saving/loss to the nearest dollar. Breakeven quantity: searches Since the demand forecast of 2,700 searches is than the breakeven quantity, STE outsource the work. STE $ by outsourcing.arrow_forwardAn oil and gas exploration firm invested $2,400,000 in drilling for natural gas in a new gas field. The firm's geologist believes the field has the potential to produce gas for 25 years. The revenue resulting from the gas well the first year after drilling is $740,000; based on previous experiences with similar types of wells, it is expected the annual revenue will decrease at an annual rate of 1%. Likewise, the costs of operating the well the first year totals $160,000; costs are expected to increase at an annual rate of 3%. Based on a 25-year planning horizon and a MARR of 20%, what is the firm's external rate of return for the investment? Click here to access the TVM Factor Table calculator. %arrow_forwardA Government issues a bond that pays 1000$ in 1 year. If the price of the bond is 920$, what is the implicit interest rate that the government is paying? Provide an answer in percentage between 0 and 100. Answer: x (8.7)arrow_forward
- You are going to earn ωt = $200,000 when working (age 21 and 60), and thenyou are going to live for the next 20 years with ωt = $0. Find the constant level ofconsumption C during years (21-80) that can be financed by your income (Interestrate is 5%). Find the level of savings St = ωt −C for periods t ≤60 and for t > 60arrow_forwardA project that will provde annual cash flows of $2,350 for nine years costs $9,700 today. a. At a required return of 12 percent, what is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. At a required return of 28 percent, what is the NPV of the project? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. At what discount rate would you be indifferent between accepting the project and rejecting it? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) а. NPV b. NPV C. Discount rate %arrow_forwardA semiconductor chip maker purchased a small manufacturing process plant for $2,131,020. The money coming in from that purchase was determined to be $500,000 annually in before-tax cash flow during its 10-year use. The net cash flow after tax is $300,000. If the chip maker wants to realize a 10% return on its investment after tax, for how many more years should the plant operate? (hint, tables)arrow_forward
- If there is a $120,000 investment on a project and the profits generates $180,0000, what is the return on investment (ROI)? 50% 40% 40% 60% 30%arrow_forwardA project involved initial construction costs of $2.5 million. The annual rate of economic depreciation for that construction class is 0.008. The project is expected to terminate in 25 years. The expected annual rate of inflation is 0.025. a. Estimate the horizon value at time t=25 owing to the remaining value of this asset. b. If the real discount rate is 0.035, what is the present value of the horizon value from (a)?arrow_forwardProblem 5- Selling an asset You bought an apartment. Its market value as this apartment. In addition, each year, the market value of this apartment increases by 10 000 zł. An alternative to this investment is to buy obligations, which will give 12.5% each year. After how many years will you sell the apartment? today is 150 000 2t. Each year you can get 15 000 zł for renting outarrow_forward
- Alice has been in a defined-contribution pension scheme since she was 35 and will retire in one year’s time at age 66. Her salary is currently £55,000. Throughout her enrolment in the scheme, she has paid in 8% of salary, and this has been topped up by employer contributions and tax relief worth 4% of salary. She will also qualify for a state pension of £9,000 per year. If, instead, Alice retires (at age 66) by putting her whole pension fund in a drawdown scheme (with annual income at 33% of her pre-retirement gross income), how much income would she have available to spend in her first year of retirement?arrow_forwardThis person earns $1000 of income today and $2000 income next year. Point C represents his consumption if he doesn't borrow or lend. If the interest rate is 10%, his Consumption Next Year at Point A is? Censumption Next Yeararrow_forward
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education