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 4, Problem 23P
Referring to Problem 7, the operations manager at Macon Controls believes that pessimistic demand has a probability of 20 percent, expected demand has a probability of 50 percent, and optimistic demand has a probability of 30 percent. Currently, new machines must be purchased at a cost of $500,000 a piece, the price charged for each control unit is $110, and the variable cost of production is $50 per unit. (Hint: since the price and variable cost for each control unit are the same, the profit maximizing product mix will be the same as the mix that maximizes the total number of units produced.)
- Draw a decision tree for this problem.
- How many machines should the company purchase, and what is the expected payoff?
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Southeastern Airlines's daily flight from Atlanta to Charlotte uses a Boeing 737, with all-coach seating for 120 people. In the past, the airline has priced every seat at $136 for the one-way flight. An average of 78 passengers are on
each flight. The variable cost of a filled seat is $22. Aysajan Eziz, the new operations manager, has decided to try a yield revenue approach, with seats priced at $79 for early bookings and at $186 for bookings within 1 week of the
flight. He estimates that the airline will sell 63 seats at the lower price and 36 at the higher price. Variable cost will not change.
Total $ contribution in the single price approach is $
(enter your response as a whole number).
Problem #3 – At Freeze Inc. the manufacturing of each air conditioning has a variable cost of $400 per unit and it takes place in a facility that has a monthly fixed cost of $200,000.
A) If Freeze Inc. sells each unit at $1,200 how many units do they need to sell every month to break-even?
B) What is the monthly revenue at the break-even point?
C) What is the monthly variable cost at the break-even point?
Southeastern Airlines's daily flight from Atlanta to Charlotte uses a Boeing 737, with all-coach seating for 120 people. In the past, the airline has priced every seat at $142 for the one-way flight. An average of 79 passengers are on each flight. The variable cost of a filled seat is $26. Aysajan Eziz, the new operations manager,
has decided to try a yield revenue approach, with seats priced at $82 for early bookings and at $187 for bookings within 1 week of the flight. He estimates that the airline will sell 67 seats at the lower price and 34 at the higher price. Variable cost will not change.
Total S contribution in the single price approach is $
(enter your response as a whole number).
Total S contribution in the two price points approach is $
(enter your response as a whole number).
Which approach is preferable to Mr. Eziz?
O A. Proposed model - two price points
O B. Current model - single price
Chapter 4 Solutions
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
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Ch. 4 - Tuff-Rider, Inc. manufactures touring bikes and...Ch. 4 - Arabelle is considering expanding the floor area...Ch. 4 - The Astro World amusement park has the opportunity...Ch. 4 - Kim Epson operates a full-service car wash, which...Ch. 4 - MKM International is seeking to purchase a new CNC...Ch. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Prob. 19PCh. 4 - Dawson Electronics is a manufacturer of high-tech...Ch. 4 - A manager is trying to decide whether to buy one...Ch. 4 - Acme Steel Fabricators experienced booming...Ch. 4 - Referring to Problem 7, the operations manager at...Ch. 4 - Darren Mack owns the Gas n’ Go convenience store...Ch. 4 - Prob. 25PCh. 4 - Prob. 1VCCh. 4 - Prob. 2VCCh. 4 - How does Southwest Airlines know they are...Ch. 4 - Prob. 4VCCh. 4 - Prob. 1CCh. 4 - Prob. 2CCh. 4 - Prob. 3C
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