Practical Operations Management
2nd Edition
ISBN: 9781939297136
Author: Simpson
Publisher: HERCHER PUBLISHING,INCORPORATED
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Chapter 1, Problem 2.3Q
Summary Introduction
Case Summary: The difference in prices that must be paid by customers for the same product at three different locations is the core of the case scenario. The 20-ounce water bottle of a particular brand is being sold at three different price levels; $5, $2 and $0.37 at concerts/ sports events, convenience stores and supermarkets respectively. The scenario has caused confusion among customers as they pay different amounts for the same product.
Interpretation: The reason for prices of water bottles being different in sports events and convenient stores and what sports events provide over convenience stores.
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What information does a decision maker need in order to perform an expected value analysis of a problem?
Techno Corporation is currently manufacturing an item at vanable costs of $4 per unit. Annual fixed costs of manufacturing this item are $141,000. The current selling price of the item is $10 per unit, and the annual sales volume is 35,000 units
a. Techno can substantially improve the item's quality by installing new equipment at additional annual fixed costs of $55,000 Vanable costs per unit would increase by $1, but, as more of the better-quality product could be sold, the annual volume would increase to 60,000 units. Should Techno buy the new equipment and maintain the current price of the item? Why or why not?
because the profit
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Chapter 1 Solutions
Practical Operations Management
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