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
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter A, Problem 5P
Spartan Castings must implement a manufacturing process that reduces the amount of particulates emitted into the atmosphere. Two processes have been identified that provide the same level of particulate reduction. The first process is expected to incur $350,000 of fixed cost and add $50 of variable cost to each casting Spartan produces. The second process has fixed costs of $150,000 and adds $90 of variable cost per casting.
- What is the break-even quantity beyond which the first process is more attractive?
- What is the difference in total cost if the quantity produced is 10,000?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Spartan Castings must implement a manufacturing process that reduces the amount of particulates emitted into the atmosphere. Two processes have been identified that provide the same level of particulate reduction. The first process is expected to incur $350,000 of fixed cost and add $50 of variable cost to each casting Spartan produces. The second process has fixed costs of $150,000 and adds $90 of variable cost per casting.a. What is the break-even quantity beyond which the first process is more attractive?b. What is the difference in total cost if the quantity produced is 10,000?
The one in bold, I already sold.
Spartan Castings must implement a manufacturing process that reduces the amount of particulates emitted into the atmosphere. Two processes have been identified that provide the same level of particulate reduction. The first process is expected to incur $340,000 of fixed cost and add
$40 of variable cost to each casting Spartan produces. The second process has fixed costs of $100,000 and adds $70 of variable cost per casting.
a. What is the break-even quantity beyond which the first process is more attractive?
The break-even quantity is 8000 castings.
b. What is the difference in total cost if the quantity produced is
5,000?
The total cost of process 1 is greater. Find the difference in total cost?
A bicycle component manufacturer produces hubs for bike wheels. Two processes are
possible for manufacturing, and the parameters of each process are as follows:
Process 1
Production rate
Daily production time
Process 2
35 parts/hour
4 hours/day
20%
15 parts/hour
7 hours/day
9%
Percent parts rejected
Assume that the daily demand for hubs allows all defect-free hubs to be sold. Select the
process that maximizes profit per day if each part is made from $4 worth of material and
can be sold for $30. Both processes are fully automated, and variable overhead cost is
charged at the rate of $40 per hour.
Chapter A Solutions
Operations Management: Processes and Supply Chains (12th Edition) (What's New in Operations Management)
Ch. A - Mary Williams, owner of Williams Products, is...Ch. A - Prob. 2PCh. A - An interactive television service that costs $10...Ch. A - A restaurant is considering adding fresh brook...Ch. A - Spartan Castings must implement a manufacturing...Ch. A - A news clipping service is considering...Ch. A - Prob. 7PCh. A - Techno Corporation is currently manufacturing an...Ch. A - The Tri-County Generation and Transmission...Ch. A - Prob. 10P
Ch. A - Tri-County G&T sells 150,000 MWh per year of...Ch. A - The Forsite Company is screening three ideas for...Ch. A - Prob. 13PCh. A - Prob. 14PCh. A - Janice Gould of Krebs Consulting is in the process...Ch. A - Build-Rite Construction has received favorable...Ch. A - Prob. 17PCh. A - Prob. 18PCh. A - Prob. 20PCh. A - Prob. 21PCh. A - Prob. 22PCh. A - Prob. 24P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- Does the process optimise the desired demand of the customer?arrow_forwardA Company belonging to the process industry carries out three consecutive processes. The output of the first Process is taken as input of the second process, and the output of the second process is taken as input of the Third process. The final product emerges out of the third process. It is also possible to outsource the intermediate Products. It has been found that over a period of time cost of production of the first process is 10% higher than The market price of the intermediate product, available freely in the market. The company has decided to close Down the first process as a measure of cost saving (vertical spin off) and outsource. Should this event be treated As discontinuing operation?arrow_forwardAudio Cables, Inc., is currently manufacturing an adapter that has a variable cost of $ 50 per unit and a selling price of $1.00 per unit. Fixed costs are $14,000. Current sales volume is 30,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $6,000. Variable costs would increase to $ 60, but sales volume should jump to 50,000 units due to a higher-quality product Should Audio Cables buy the new equipment?arrow_forward
- Syntech makes digital cameras for drones. Their basic digital camera uses $80 in variable costs and requires $1,400 per month in fixed costs. Syntech sells 100 cameras per month. If they process the camera further to enhance its functionality, it will require an additional $50 per unit of variable costs, plus an increase in fixed costs of $1,000 per month. The current price of the camera is $150. The marketing manager is positive that they can sell more and charge a higher price for the improved version. At what price level would the upgraded camera begin to improve operational earnings? Price to be charged $fill in the blank 1arrow_forwardDraw up a plan for a preliminary assessment of waste minimization opportunities in a small automobile repair shop. Identify, in advance, possible target areas for waste reduction.arrow_forwardTribal Systems, Inc., is opening a new plant and has yet todecide on the type of process to employ. A labor-intensiveprocess would cost $10,000 for tools and equipment and $14 for labor and materials per item produced. A more au-tomated process costs $50,000 in plant and equipment but has a labor/material cost of $8 per item produced. A fullyautomated process costs $300,000 for plant and equipmentand $2 per item produced. If process selection were basedsolely on lowest cost, for what range of production wouldeach process be chosen?arrow_forward
- Tom is studying Chemical Engineering at Bradford University where he has developed a newfermentation process of cheese. His fermentation process is more economical and alsoconsolidates curd of milk solids into cheese in a more environmentally friendly manner. Thecheese produced by this process is more nutritious and tastes good too. Tom’s process is sogood that he was awarded the young innovator prize by the University.After completion of his degree, Tom has decided to develop his cheese fermentation processinto a business. He discussed this idea with his friend Jamal, who has been working as abusiness manager in MyD-Dairy for the past 15 years. Jamal introduced Tom to Jackie who isin the business of the distribution of dairy products for the past decade and is interested inestablishing a new line of cheese production business. All three of them are very excited aboutthis new business idea. Tom’s parents have promised to give him a £10,000 personal loan…arrow_forwardCompany 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_forwardA manager of Splitter Manufacturing that produces computer hard drives is planning to lease a new automated inspection system. The manager believes the new system will be more accurate than the current manual inspection process. The firm has had problems with hard drive defects in the past and the automated system should help catch these defects before the drives are shipped to the final assembly manufacturer. Respond to all questions based on the data provided. Current Manual Inspection System Annual fixed cost = $45,000 Inspection variable cost per unit = $15 per unit New Automated Inspection System Annual fixed cost = $165,000 Inspection variable cost per unit = $0.65 per unit 2. In Problem 1, assume the cost factors given in “current manual system” have not changed. A marketing representative from Hi-Quality, a firm that specializes in providing manual inspection processes for other firms, approached Splitter…arrow_forward
- A manager of Splitter Manufacturing that produces computer hard drives is planning to lease a new automated inspection system. The manager believes the new system will be more accurate than the current manual inspection process. The firm has had problems with hard drive defects in the past and the automated system should help catch these defects before the drives are shipped to the final assembly manufacturer. Respond to all questions based on the data provided. Current Manual Inspection System Annual fixed cost = $45,000 Inspection variable cost per unit = $15 per unit New Automated Inspection System Annual fixed cost = $165,000 Inspection variable cost per unit = $0.65 per unit a. Suppose annual demand is 7,000 units. Should the firm lease the new inspection system? Why or why not? (Your “why” should not be “the spreadsheet output indicated….”) b. Assume you are trying to change (or negotiate) situational factors to make…arrow_forwardDescribe the role of A/B testing in performance optimization strategies.arrow_forwardYou are hired as a consultant for Cool Zone Inc. The company currently has a 1-year contract for the production of 200,000 fuse-plugs for a new state of the art off-road vehicle. With an increasing demand for these vehicles, The owner however, hope that the contract will be extended which will result in increased volume next year. Cool Zone has developed cost for 3 alternatives namely: General-Purpose Equipment (GPE), Flexible manufacturing System (FMS) and expensive but market dominant machine (DM). The cost associated with labour, raw materials and equipment per unit produced is as follows: GPE is $15, while DM and FMS have an associated cost of $13 and $14 respectively. The cost associated with FMS is $200,000, GPE $ 100,000 and DM $500,000 respectively. Regardless of the decision made, the company has to produce a total of 200,000 fuse plugs. (a) Based on the information above, which is the best option for the contract? What technique was used to determine your answer? Provide an…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Operations Management
Operations Management
ISBN:9781259667473
Author:William J Stevenson
Publisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...
Operations Management
ISBN:9781259666100
Author:F. Robert Jacobs, Richard B Chase
Publisher:McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...
Operations Management
ISBN:9781478623069
Author:Steven Nahmias, Tava Lennon Olsen
Publisher:Waveland Press, Inc.
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY