Smith Productions manufactures its hand-tools in-house. Maintenance and repair costs are increasing at ten percent per year. The company is evaluating two new processes. The first process has an annual fixed cost of $500,000 and a variable cost of $12 per part. The second process is more automated and requires an annual fixed cost of $700,000 and a variable cost of $11 per part. Use the Excel template Break-Even in MindTap to answer the following question: What is the break-even quantity between these two processes

Smith Productions manufactures its hand-tools in-house. Maintenance and repair costs are increasing at ten percent per year. The company is evaluating two new processes. The first process has an annual fixed cost of $500,000 and a variable cost of $12 per part. The second process is more automated and requires an annual fixed cost of $700,000 and a variable cost of $11 per part. Use the Excel template Break-Even in MindTap to answer the following question: What is the break-even quantity between these two processes

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter4: Linear Programming Models

Section4.8: Data Envelopment Analysis (dea)

Problem 42P

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Samoset Fans, Inc. manufacturers its fan blades in-house. The owner, Betty Dice, doesn't outsource any fan parts except fan motors — all other fans parts are made in-house. Their current process and its equipment are getting old. Maintenance and repair costs are increasing at eleven percent per year. She and her company team are evaluating two new processes. The first process has an annual fixed cost of $760,000 and a variable cost of $19 per fan blade. The second process is more automated and requires an annual fixed cost of $1,100,000 and a variable cost of $11 per fan blade. The internal transfer cost of a fan blade is $24, and this helps the firm determine the total manufactured cost of a completed fan. Use the Excel template Break-Even in MindTap to answer the following questions: What is the break-even quantity between these two processes? Round your answer to the nearest whole number. fan blades If predicted demand for next year is 160,000 blades, what process do you…
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