Production and Operations Analysis, Seventh Edition
Production and Operations Analysis, Seventh Edition
7th Edition
ISBN: 9781478623069
Author: Steven Nahmias, Tava Lennon Olsen
Publisher: Waveland Press, Inc.
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Chapter 1, Problem 46AP
Summary Introduction

To determine: The number of silk ties D’s department store must sell globally to break even on the investment made in new plant.

Introduction: Thebreakevenistheunitorrevenuevolumerequiredtocoverthetotalcostsofbothfixed andvariablecompanycosts.On thebreakevenlevel,totalprofitisalways zero.

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Delon’s Department Store sells several of its own brands of clothes and severalwell-known designer brands as well. Delon’s is considering building a plant in Malaysia to produce silk ties. The plant will cost the firm $5.5 million. Theplant will be able to produce the ties for $1.20 each. On the other hand, Delon’scan subcontract to have the ties produced and pay $3.00 each. How many tieswill Delon’s have to sell worldwide to break even on its investment in the newplant?
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