A gold mining area in Lanao contains on average 1 ounce of gold per ton. Two methods of processing are available; method a cost 1.5m per ton and recovers 90% of gold: method b cost 1.3m per ton and recovers 80% of the gold. If gold can be sold for 2.4m per ounce which method is better and by how much

A gold mining area in Lanao contains on average 1 ounce of gold per ton. Two methods of processing are available; method a cost 1.5m per ton and recovers 90% of gold: method b cost 1.3m per ton and recovers 80% of the gold. If gold can be sold for 2.4m per ounce which method is better and by how much

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter11: Simulation Models

Section: Chapter Questions

Problem 63P: It costs a pharmaceutical company 75,000 to produce a 1000-pound batch of a drug. The average yield...

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It costs a pharmaceutical company 75,000 to produce a 1000-pound batch of a drug. The average yield from a batch is unknown but the best case is 90% yield (that is, 900 pounds of good drug will be produced), the most likely case is 85% yield, and the worst case is 70% yield. The annual demand for the drug is unknown, with the best case being 20,000 pounds, the most likely case 17,500 pounds, and the worst case 10,000 pounds. The drug sells for 125 per pound and leftover amounts of the drug can be sold for 30 per pound. To maximize annual expected profit, how many batches of the drug should the company produce? You can assume that it will produce the batches only once, before demand for the drug is known.
Seas Beginning sells clothing by mail order. An important question is when to strike a customer from the companys mailing list. At present, the company strikes a customer from its mailing list if a customer fails to order from six consecutive catalogs. The company wants to know whether striking a customer from its list after a customer fails to order from four consecutive catalogs results in a higher profit per customer. The following data are available: If a customer placed an order the last time she received a catalog, then there is a 20% chance she will order from the next catalog. If a customer last placed an order one catalog ago, there is a 16% chance she will order from the next catalog she receives. If a customer last placed an order two catalogs ago, there is a 12% chance she will order from the next catalog she receives. If a customer last placed an order three catalogs ago, there is an 8% chance she will order from the next catalog she receives. If a customer last placed an order four catalogs ago, there is a 4% chance she will order from the next catalog she receives. If a customer last placed an order five catalogs ago, there is a 2% chance she will order from the next catalog she receives. It costs 2 to send a catalog, and the average profit per order is 30. Assume a customer has just placed an order. To maximize expected profit per customer, would Seas Beginning make more money canceling such a customer after six nonorders or four nonorders?
Lemingtons is trying to determine how many Jean Hudson dresses to order for the spring season. Demand for the dresses is assumed to follow a normal distribution with mean 400 and standard deviation 100. The contract between Jean Hudson and Lemingtons works as follows. At the beginning of the season, Lemingtons reserves x units of capacity. Lemingtons must take delivery for at least 0.8x dresses and can, if desired, take delivery on up to x dresses. Each dress sells for 160 and Hudson charges 50 per dress. If Lemingtons does not take delivery on all x dresses, it owes Hudson a 5 penalty for each unit of reserved capacity that is unused. For example, if Lemingtons orders 450 dresses and demand is for 400 dresses, Lemingtons will receive 400 dresses and owe Jean 400(50) + 50(5). How many units of capacity should Lemingtons reserve to maximize its expected profit?
A gold mining area in Lanao contains on average, 1 ounce of gold per ton. Two methods of processing are available; method A costs ₱1.5 M per ton and recovers 90% of gold; method B cost ₱1.3M per ton and recovers 80% of the gold. If gold can be sold for ₱2.4M per ounce, which method is better and by how much?
Easyville University awarded scholarships of $50,000.00 each to two students for a bachelor’s degree program. The standard time for degree completion is four years or 8 semesters. Easyville University stipulates that the scholarship amount will be increased or decreased depending on how well the students meet, exceed or fail to meet the standard time (i.e. more money for exceeding standard and less for failing to meet standard). Sam Speedy completed his degree program in three and one half years; while Larry Laggard completed his degree program in five years. Using the Standard Hour Plan, how much scholarship money will be given to: a)Speedy Sam? b) Larry Laggard?
A car company is planning the introduction of a new electric car. There are two options for production. One is to produce the electric car at the company’s existing plant in Illinois, sharing production with its other products that are currently being produced there. If the sales of the electric car are moderate, this will work out well as there is significant capacity to produce all of the products there. However, if sales of the electric car are strong, this option would necessitate Adding a 3rd shift, which would lead to significantly higher costs. Another option is to build a new plant in Ohio. The new plant would have sufficient capacity to meet whatever level of demand for the new car. However, if sales of the new car not strong, the plant would be underutilized and less efficient. Since this is a new product, sales are hard to predict. The forecast indicates there is a 60% chance of strong sales (annual sales of 100,000), and 40% chance of moderate sales (annual sales of…
A recruiter for a job placement agency is considering whether to pay $50,000 per year to lease a new recruiting facility in a prime location in Washington D. C. He estimates it will cost $50 per recruit to process the paperwork at this new location. He receives a $75 commission for each new recruit he processes. Part A - If the office space at this new location has design and effective capacities of 10,000 and 8,000 recruits processed annually, respectively, and 6,000 recruits will be processed per year, what will be the utilization of the office space?Part B - If his office space at this new location has design and effective capacities of 10,000 and 8,000 recruits processed annually, respectively, and he plans to be 90% efficient in his use of this space, how many recruits does he plan to process per year?
The Avis Company is a car rental company and is located three miles from the Los Angeles airport (LAX). Avis is dispatching a bus from its offices to the airport every 2 minutes. The average traveling time (a round trip) is 20 minutes. How many Avis buses are traveling to and from the airport? The branch manager wants to improve the service and suggests dispatching buses every 0.5 minute. She argues that this will reduce the average traveling time (a round trip) to Avis’s offices to 2.5 minutes. Is she correct? If your answer is negative, then what will the average traveling time be?
Hawkins Manufacturing Company produces connecting rods for 4- and 6-cylinder automobile engines using the same production line. The cost required to set up the production line to produce the 4-cylinder connecting rod is $2,000, and the cost required to set up the production for the 6-cylinder connecting rod is $3,500. Manufacturing costs are $15 for each 4-cylinder connecting rod and $18 for each 6-cylinder connecting rod. Hawkins makes a decision at the end of each week as to which product will be manufactured the following week. If a production changeover is necessary from one week to the next, the weekend is used to reconfigure the production line.Once the line has been set up, the weekly production capacities are 6,000 6-cylinder connecting rods and 8,000 4-cylinder connecting rods. Letx4 = the number of 4-cylinder connecting rods produced next week,x6 = the number of 6-cylinder connecting rods produced next week,s4 = 1 if the production line is set up to produce the 4-cylinder…
The union manufacturing company is producing two types of products a and b. The demand forecasts, batch size, and time standards for Mark 1 operation are as follows: Product A. product B demand forecast (units/yr) 1,000 4,000 batch size (units/batch) 20 10 processing time (hr/unit) 3.2. 4.5 setup time (hr/batch) 10 20 the company works 250 days per yr and operates two shifts, each covering 8 hours. If a 20 percent capacity cushion is maintained how many new Mark 1 machines are required if union does not resort to any short term capacity options?
A tire company has the following capacity and demand data for the year: Capacity = 3,000 tires per month Demand for the first six (6) months (January – June) = 2, 500 tires per month Demand for the next six (6) months (July – December) = 4, 000 tires per month If the company decides to produce tires at capacity (3, 000 tires per month) during the first six months, how many tires will it be able to build up in its inventory after six months? How many months will the built-up inventory computed in A last to meet the increasing demand. Assuming that the company continues to product at capacity per month. (
CompDesk, Inc., makes a single model of an ergonomic desk (with chair) for computer usage. The desk is manufactured in building 1, and the chair is manufactured in building 2. Monthly capacities and production levels are as follows. Building 1 (Desks) Building 2 (Chairs) Monthly capacity 400 500 Monthly production 400 400 The company will sell a desk only with a chair and can sell 500 desks per month. The units (desk with chair) sell for $312 each and have a variable cost of $129 each. Required: a. Is there a bottleneck at CompDesk in Building 1 or Building 2? b. CompDesk’s production supervisors state they could increase building 1’s capacity by 100 desks per month by producing desks on the weekend. Producing on the weekend would not affect the sales price. Variable cost per unit would increase by $29 for those produced on the weekend because of the premium paid to labor. Fixed costs would also increase by $20,800 per month. b-1. Calculate the differential…