Operation Management Midterm Sampple

1034 WordsFeb 25, 20135 Pages
|Midterm Example Test v2 | | 1. A manufacturing firm is considering three alternatives for automation. They anticipate annual production volume to be 75,000 units. The costs for each alternative are as shown: | |Alternative | | |1 |2 |3 | |Annual Fixed Costs |60,000 |$180,000 |$300,000 | |Variable Cost/Unit |$0.65 |$0.55 |$0.40 | | | | | | |a. |What sales price must be charged for Alternative 1 to break even? | |b. |What sales price must be charged for…show more content…
|Efficiency = Σt/(N × CT) = 3.81/(7 × .742) = 3.81/5.194 = .73353 = 73.353% | | | | | | | | | | 5. William Green, vice president of manufacturing for Computer Products Corporation (CPC), and his staff are studying three Midwestern alternative locations for a new production facility for producing high-resolution scanners. His staff analysts predict that the scanners will be a growing market over the next ten years, and the analysis group shares marketing's enthusiasm for planning facilities for producing this new product line. The analysts have developed these estimates for the three locations: | |Annual Fixed Costs |Variable Cost | |Location Alternative |(Millions of |per Scanner | | |Dollars) | | |Cleveland, Ohio |$3.9 |$3,400 | |South Bend, Indiana | 3.6 | 3,700 | |Grand Rapids, Michigan | 3.1 | 4,000 | | | | | The marketing department at CPC estimates sales for the scanners will be 1,000 scanners in the first year, 2,000 in the second year, and 4,000 in the third year. |a. |In what range of

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