Production and Operations Analysis, Seventh Edition
7th Edition
ISBN: 9781478623069
Author: Steven Nahmias, Tava Lennon Olsen
Publisher: Waveland Press, Inc.
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Chapter 1, Problem 50AP
Summary Introduction
To determine: Comparison of purchasing costs and production costs of thekeyboard’s supplier firm and the break-even order quantity.
Introduction:A firm attains its break-even level when its earned revenue or sales quantity meets the cost. This is the point of no profit no loss.In other words, on this level, the firm earns zero profit.
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Students have asked these similar questions
1. Consider the following demand scenario:
Quantity
Probability
2,000
3%
2,100
8%
2,200
2,300
15%
30%
2,400
17%
2,500
12%
2,600
10%
2,700
5%
Suppose the manufacturer produces at a cost of $20/unit and sells to the distributor at $40/unit. The
distributor sells to end customers for $50/unit during season; unsold units are sold for $10/unit after
season.
1. Assume the manufacturer will buy any unsold items at price $32/unit. What is the optimal order
quantity?
2. What is the expected number of unsold items?
3. What is the profit for the distributor?
4. What is the profit for the supplier?
ABC Company purchased its inventory at a lump price of P20,000. Relative sales value for each type of inventory was:
Inventory XX, P10,000
Inventory YY, P4,000
Inventory ZZ, P10,000
How much would be the cost assigned to inventory XX, YY an ZZ respectively?
10,000. 4,000 and 10,000 respectively
10,000, 4,000 and 8,333 respectively
8,333, 3,333 and 8333 respectively
6667, 6667 and 6667 respectively
Emery Pharmaceutical uses an unstable chemicalcompound that must be kept in an environment where both temperatureand humidity can be controlled. Emery uses 800 poundsper month of the chemical, estimates the holding cost to be 50%of the purchase price (because of spoilage), and estimates ordercosts to be $50 per order. The cost schedules of two suppliers areas follows: a) What is the economic order quantity for each supplier?b) What quantity should be ordered, and which supplier should be used?c) What is the total cost for the most economic order size?d) What factor(s) should be considered besides total cost?
Chapter 1 Solutions
Production and Operations Analysis, Seventh Edition
Ch. 1.3 - Prob. 1PCh. 1.3 - Prob. 2PCh. 1.3 - Prob. 3PCh. 1.3 - Prob. 4PCh. 1.3 - Prob. 5PCh. 1.3 - Prob. 6PCh. 1.3 - Prob. 7PCh. 1.3 - Prob. 8PCh. 1.3 - Prob. 9PCh. 1.3 - Prob. 10P
Ch. 1.3 - Prob. 11PCh. 1.3 - Prob. 12PCh. 1.7 - Prob. 13PCh. 1.7 - Prob. 14PCh. 1.7 - Prob. 15PCh. 1.7 - Prob. 16PCh. 1.7 - Prob. 17PCh. 1.7 - Prob. 18PCh. 1.7 - Prob. 19PCh. 1.7 - Prob. 20PCh. 1.7 - Prob. 21PCh. 1.8 - Prob. 22PCh. 1.8 - Prob. 23PCh. 1.8 - Prob. 24PCh. 1.9 - Prob. 25PCh. 1.9 - Prob. 26PCh. 1.9 - Prob. 27PCh. 1.9 - Prob. 28PCh. 1.10 - Prob. 29PCh. 1.10 - Prob. 30PCh. 1.10 - Prob. 31PCh. 1.10 - Prob. 32PCh. 1.10 - Prob. 33PCh. 1.10 - Prob. 34PCh. 1.10 - Prob. 35PCh. 1.10 - Prob. 36PCh. 1.10 - Prob. 37PCh. 1.11 - Prob. 38PCh. 1.11 - Prob. 39PCh. 1.11 - Prob. 40PCh. 1.11 - Prob. 41PCh. 1.11 - Prob. 42PCh. 1 - Prob. 43APCh. 1 - Prob. 44APCh. 1 - Prob. 45APCh. 1 - Prob. 46APCh. 1 - Prob. 47APCh. 1 - Prob. 48APCh. 1 - Prob. 49APCh. 1 - Prob. 50AP
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