222Chapter 88.20 Chem-Tex Chemical is considering two additivesfor improving the dry-weather stability of its low-cost acrylic paint. Additive A has a first cost of$110,000 and an annual operating cost of $60,000.Additive B has a first cost of $175,000 and an an-nual operating cost of $35,000. If the companyuses a 3-year recovery period for paint productsand a MARR of 20% per year, which processeconomically favored? Use an incremental RORanalysis.is

Since ROR is lesser than the MARR of 20%, the original process, which uses Additive A should be…

Answered: Chem-Tex Chemical is considering two…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter10: Introduction To Simulation Modeling

Section: Chapter Questions

Problem 41P: At the beginning of each week, a machine is in one of four conditions: 1 = excellent; 2 = good; 3 =...

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Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. Is Ben Gibson acting legally? Is he acting ethically? Why or why not?
Scenario 3 Ben Gibson, the purchasing manager at Coastal Products, was reviewing purchasing expenditures for packaging materials with Jeff Joyner. Ben was particularly disturbed about the amount spent on corrugated boxes purchased from Southeastern Corrugated. Ben said, I dont like the salesman from that company. He comes around here acting like he owns the place. He loves to tell us about his fancy car, house, and vacations. It seems to me he must be making too much money off of us! Jeff responded that he heard Southeastern Corrugated was going to ask for a price increase to cover the rising costs of raw material paper stock. Jeff further stated that Southeastern would probably ask for more than what was justified simply from rising paper stock costs. After the meeting, Ben decided he had heard enough. After all, he prided himself on being a results-oriented manager. There was no way he was going to allow that salesman to keep taking advantage of Coastal Products. Ben called Jeff and told him it was time to rebid the corrugated contract before Southeastern came in with a price increase request. Who did Jeff know that might be interested in the business? Jeff replied he had several companies in mind to include in the bidding process. These companies would surely come in at a lower price, partly because they used lower-grade boxes that would probably work well enough in Coastal Products process. Jeff also explained that these suppliers were not serious contenders for the business. Their purpose was to create competition with the bids. Ben told Jeff to make sure that Southeastern was well aware that these new suppliers were bidding on the contract. He also said to make sure the suppliers knew that price was going to be the determining factor in this quote, because he considered corrugated boxes to be a standard industry item. As the Marketing Manager for Southeastern Corrugated, what would you do upon receiving the request for quotation from Coastal Products?
A machine can be purchased at t = 0 for $20,000. The estimated life is 5 years, with an estimated salvage value of zero at that time. The average annual operating and maintenance expenses are expected to be $5,500. If MARR = 10%, what must the average annual revenues be in order to be indifferent between (a) purchasing the machine or (b) doing nothing?
John Hospital contains 450 beds. The average occupancy rate is 80% per month. In other words, on average, 80% of the hospital’s beds are occupied by patients. At this level of occupancy, the hospital’s operating costs are P56 per occupied bed per day, assuming a 30-day month. This P56 figures contains both variable and fixed cost components. During the month of June, the hospital’s occupancy rate was only 60%. A total of P571,725 in operating costs was incurred during that month. Using the high low method, the amount of variable cost per occupied bed per day is?
A manager is going to purchase new processing equipment and must decide on the number ofspare parts to order with the new equipment. The spares cost $200 each, and any unused spareswill have an expected salvage value of $50 each. The probability of usage can be described by thisdistribution:Number 0 1 2 3Probability .10 .50 .25 .15If a part fails and a spare is not available, two days will be needed to obtain a replacementand install it. The cost for idle equipment is $500 per day. What quantity of spares should beordered?a. Use the ratio method.b. Use the tabular method (see Table 13.3).
Machine A was purchased last year for $20,000 and had an estimated market value of $2,000 at the end of its 6-year useful life. Annual operating costs are $2,000. The machine will perform satisfactorily over the next 5 years. A salesperson for another company is offering a replacement, machine B , for $14,000 with a market value of $1,400 after 5 years. Annual operating costs for machine B will only be $1,400. A trade-in allowance of $10,400 has been offered for machine A. If the MARR is 12% per year, should you buy the new machine? Use RORAI method. Write a breif interpretation of your answer.
Pendryl Office Supplies is evaluating the profitability of leasing a photocopier for its customers to use on a self serve basis at 10 cents/copy. The copier may be leased for $300 per month plus 1.5 cents per copy on a full service contract. Pendryl can purchase paper at $5 per 500 sheet ream. Toner costs $100 per bottle, which in normal use will last for 5000 pages. Pendryl thinks that there are additional other costs of 0.5 cents per copy. A. How many copies per month must be sold in order to break even? (6000 copies/month) B. What will be the increase in monthly profit for each 1000 copies sold above the break-even point? ($50 per month)
Situation A: If a person lives for 3 years with a disease and the current standard of care for that disease means he/she lives with a utility level of 0.7 .-What is the QALY? If that person takes a new medicine (Medicine A) because of which his/her utility level increases to 0.8,-What will be the new QALY? Calculate the benefit of new medicine. Situation C: if another new medicine (Medicine B) prolongs the patient’s life by 2 years, at a utility level of 0.7,-Calculate the new QALY
Eastern Motors Auto Dealership wanted to estimate the average CLV over a 5 year time horizon of a customer who purchases a new vehicle. The average vehicle sells for $28,939 and has a margin of 6%. Based on historical averages, 83 of people buying a new vehicle at Eastern will return for service 9 times over the next 5 years. Though it varies considerably, Eastern generates approximately $92 in margin on each service visit after accounting for parts and direct labor costs. What is the estimated 5 year value of the service component (only) of a customer who purchases a new vehicle at Eastern Motors?
A company owns two adjacent builds, and in each building, there is one piece of equipment that operates separately from one another. Based on past history, equipment 1 is expected to break down 7 times a year, with a variance of 3, and costs $600 per breakdown. equipment 2 is expected to break down 9.2 times per year, with a variance of 2.1, and costing $245 per breakdown. 1. What is the company’s expected cost for equipment breakdowns? 2. What is the variance of the breakdown cost? Provide set up of work to compare notes.
Two firms in the chemical solvent industry decide to merge. Employees in the testing department of firm A have enjoyed high pay for many years. However, firm A is purchased by firm B who has a history of paying low wages. As a result, employees in firms A's testing department earn on average $1.00 more per hour than those at firm B. Upon completion of the merger, what wage levels should prevail? Should wages be cut for those who worked for firm A? Or, should wages be increased for those in firm B?
Glen Evans is an emergency medical technician for alocal rescue team and is routinely called on to renderemergency care to citizens facing crisis situations. AlthoughGlen has received extensive training, he also relies heavilyon his equipment for support. During a normal call, Glenuses five essential pieces of equipment, whose individualreliabilities are 0.98, 0.97, 0.95, 0.96, and 0.99, respectively.a. Glen claims his equipment has maximum probability offailure of 5%. Is he correct? b. What individual equipment reliabilities would guaran-tee an overall reliability of 96%?

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