Operational Decisions

921 Words Jul 19th, 2012 4 Pages
Operational Decisions
Strayer University
July 19, 2012

Assume you have been hired as a managing consultant be a company to offer some advice that will help it make a decision as to whether it should shut down completely or continue its operations. It currently uses 100 workers to produce 6,000 units of output per month (working 20 days/month). The daily wage (per worker) is $70, and the price of the firm’s output is $32. The cost of other variable inputs is $2,000 per day. You are told that the firm’s fixed cost is “high enough” so that the firm’s total costs exceed its total revenue. The marginal cost of the last unit is $30.
1. Briefly describe the details of the fictitious business that you created for this assignment.
The
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Press Body Nutrition is spending 92% of its income from sales to pay for employees salaries. Recommend how the company can improve its profitability. Then, develop a brief plan to implement the recommendations. Press Body Nutrition should increase its output by increasing the day, 20 days out of the month is not allowing them to produce more which will than increase in sales. Press Body Nutrition can reduce labor expenses by reducing hours, reducing employees or reducing salaries. This will result in increased margins and without any increase in labor costs. Assess the circumstances in which the company should discontinue operations. Provide a rationale with your response. Press Body Nutrition needs to discontinue operations if they aren’t able to increase sales or increase the selling price for their Protein Powder. Operating costs are very high, and the company will need to bring in more sales to offset the high labor cost. References Micheals, R. J. (2011). Transactions and strategies: Economics for management. Upper Saddle River, NJ: Cengage Mohr, Angie. (2012). Factors Affecting Economic Development and Growth. Retrieved on July 19, 2012 from http://smallbusiness.chron.com/factors-affecting-economic-development-growth-1517.html Weygandt, J.J. Kimmel,

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