Garfield Industries is expanding its operations throughout the Southeast United States. Garfield anticipates that the expansion will increase sales by $1,000,000 and increase operating costs (excluding depreciation and amortization) by $700,000. Depreciation and amortization expenses will rise by $50,000, interest expense will increase by $150,000, and the company’s tax rate will remain at 40 percent. If the company’s forecast is correct, how much will net income increase or decrease, as a result of the expansion

Garfield Industries is expanding its operations throughout the Southeast United States. Garfield anticipates that the expansion will increase sales by $1,000,000 and increase operating costs (excluding depreciation and amortization) by $700,000. Depreciation and amortization expenses will rise by $50,000, interest expense will increase by $150,000, and the company’s tax rate will remain at 40 percent. If the company’s forecast is correct, how much will net income increase or decrease, as a result of the expansion

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 31P

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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?
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Use regression analysis to forecast the point at which Swanson needs to “build out” the top two floors of the new building, namely when demand will exceed 16000 births?
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Spring and Summer Fashions, a clothing producer, has generated a forecast for the next eight weeks.Demand is expected to be fairly steady, except for periods 3 and 4, which have higher demands.Period 1 2 3 4 5 6 7 8 TotalForecast 1,200 1,200 1,400 3,000 1,200 1,200 1,200 1,200 11,600The company typically hires seasonal workers to handle the extra workload in periods 3 and 4. Thecost for hiring and training a seasonal worker is $50 per worker, and the company plans to hire twoadditional workers and train them in period 3, for work in period 4, and then lay them off (no cost forlayoff). Develop an aggregate plan that uses steady output from regular workers with added outputfrom the two seasonal workers in period 4. The output rate for the seasonal workers is slightly lessthan that of regular workers, so their cost per unit is higher. The cost per unit for regular workers is$4 per unit, while cost per unit for the seasonal workers is $5 per unit. Backlog cost is $1 per unitper period.
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Manager Chris Channing of Fabric Mills, Inc., has developed the forecast shown in the table for bolts of cloth. The figures are in hundreds of bolts. The department has a regular output capacity of 275(00) bolts per month, except for the seventh month, when capacity will be 240(00) bolts. Regular output has a cost of $43 per hundred bolts. Workers can be assigned to other jobs if production is less than regular. The beginning inventory is zero bolts. Month 1 2 3 4 5 6 7 Total Forecast 275 350 225 300 280 275 270 1,975 a. Develop a chase plan that matches the forecast and compute the total cost of your plan. Overtime is $68 per hundred bolts. Regular production can be less than regular capacity b. Would the total cost be less with full regular production each period with no overtime, but using a subcontractor to handle the excess above regular capacity at a cost of $53 per hundred bolts? Backlogs are not allowed. The inventory carrying cost is $2 per hundred bolts. (Round…
A manager is attempting to put together an aggregate plan for the coming nine months. She has obtained a forecast of expected demand for the planning horizon. The plan must deal with highly seasonal demand; demand is relatively high in periods 3 and 4 and again in period 8, as can be seen from the following forecasts: Period 1 2 3 4 5 6 7 8 9 Total Forecast 1 2 3 4 5 6 7 8 9 TOTAL 190 230 260 280 210 170 160 260 180 1,940 The department now has 20 full-time employees, each of whom can produce 10 units of output per period at a cost of $6 per unit. Inventory carrying cost is $5 per unit per period, and backlog cost is $10 per unit per period. What is the total inventory cost?