Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
12th Edition
ISBN: 9780134741062
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
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Textbook Question
Chapter 2, Problem 2P
Two different manufacturing processes are being considered for making a new product. The first process is less capital-intensive, with fixed costs of only $50,000 per year and variable costs of $700 per unit. The second process has fixed costs of $400,000 but has variable costs of only $200 per unit.
- What is the break-even quantity beyond which the second process becomes more attractive than the first?
- If the expected annual sales for the product is 800 units, which process would you choose?
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A company is about to begin production of a new product. The manager of the department that will produce one of the components for the product wants to know how often the machine used to produce the item will be available for other work. The machine will produce the item at a rate of 200 units a day. Eighty units will be used daily in assembling the final product. Assembly will take place five days a week, 50 weeks a year. The manager estimates that it will take almost a full day to get the machine ready for a production run, at a cost of 300. Inventory holding costs will be a 10 a year.
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Chapter 2 Solutions
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
Ch. 2 - Prob. 3DQCh. 2 - Prob. 4DQCh. 2 - Consider the range of processes in the financial...Ch. 2 - Prob. 6DQCh. 2 - Continuous improvement recognizes that many small...Ch. 2 - Prob. 8DQCh. 2 - Paul O’Neill, former U.S. Treasury Secretary,...Ch. 2 - Dr. Gulakowicz is an orthodontist. She estimates...Ch. 2 - Two different manufacturing processes are being...Ch. 2 - The operations manager at Sebago Manufacturing is...
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- Company Z wants to change its major producť's production process. Detailed production cost data of four different process alternatives are given in the table below. The annual demand for the product is 60.000 units and the selling price is $120 per unit. Annualized Fixed Cost Variable Costs (per unit) ($) Process Type of Plant & Equipment Labor Material Energy Mass Customization $1,400,000 $1,000,000 $1,600,000 $1,960,000 30 18 12 Intermittent 24 26 20 Repetitive 28 15 12 Continuous 25 15 10 According to the given information about the demand, the value of annual profit using the best alternative process is $arrow_forwardWhat processes at manufacturing firms are really service processes that involve considerable customer contact? Can customer contact be high, even if the process only has internal customers?arrow_forwardtwo different manufacturing processes are being considered for making a new product. the first process is less capital intensive, with fixed costs of only $50,000 per year and variable costs of $700 per unit. the second process has fixed costs of $400,00 but has variable costs of only $200 per unit a. what is the break even quantity beyond which the second process becomes more attractive than the first? b. if the expected annual sales for the product is 800 units, which process would you choose?arrow_forward
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