Pearson Etext For Principles Of Operations Management: Sustainability And Supply Chain Management -- Access Card (11th Edition)
11th Edition
ISBN: 9780135639122
Author: Jay Heizer, Barry Render, Chuck Munson
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 13, Problem 25P
Summary Introduction
To explain: The approach that is preferable.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Southeastern Airlines's daily flight from Atlanta to Charlotte uses a Boeing 737, with all-coach seating for 120 people. In the past, the airline has priced every seat at $136 for the one-way flight. An average of 81 passengers are on each flight. The variable cost of a filled seat is $23. Aysajan Eziz, the new operations manager, has decided to try a yield revenue approach, with seats priced at $82 for early bookings and at $195 or bookings within 1 week of the flight. He estimates that the airline will sell 66 seats at the lower price and 33 at the higher price. Variable cost will not change.
1. Total $ contribution in the single price approach is ? (enter your response as a whole number).
2. Total $ contribution in the two price points approach is ? (enter your response as a whole number).
3.Which approach is preferable to Mr. Eziz?
A.Proposed model−two price points
OR
B. Current Model - Single price
Southeastern Airlines's daily flight from Atlanta toCharlotte uses a Boeing 737, with all-coach seating for 120 people.In the past, the airline has priced every seat at $140 for theone-way flight. An average of 80 passengers are on each flight.The variable cost of a filled seat is $25. Aysajan Eziz, the newoperations manager, has decided to try a yield revenue approach,with seats priced at $80 for early bookings and at $190 for bookingswithin 1 week of the flight. He estimates that the airline willsell65 seats at the lower price and 35 at the higher price. Variablecost will not change. Which approach is preferable to Mr. Eziz?
Use the following information for the next 3 problems:
ABC Company plans to construct a 60,000 sq. ft private warehouse and rent public warehouse as needed. Warehouse inventory turns at the rate of 2 times per month. One pound of merchandise occupies 0.2 cubic feet of warehouse space and can be stacked 10 feet high. Given aisles, and normal operating efficiency, only 50 percent of the total warehouse space is actually used for storage. Assume the facility is being built to size so no additional space is allowed for future product growth.
A private warehouse can be constructed for $36 per sq. ft. and can be amortized over 20 years. Annual fixed costs amount to $20 per sq. ft. of total space. The cost of operation is $0.03 per pound of throughput.
Space may also be rented for a storage charge on inventory of $0.06 per pound per month and a handling charge of $0.05 per pound of throughput. Monthly demands for a typical year are as follows:
Month
Demand (lb)
Jan
2,000,000…
Chapter 13 Solutions
Pearson Etext For Principles Of Operations Management: Sustainability And Supply Chain Management -- Access Card (11th Edition)
Ch. 13 - Make the case for, and then against, this pricing...Ch. 13 - Prob. 1DQCh. 13 - Why are SOP teams typically cross-functional?Ch. 13 - Prob. 3DQCh. 13 - Prob. 4DQCh. 13 - Prob. 5DQCh. 13 - Prob. 6DQCh. 13 - Prob. 7DQCh. 13 - Prob. 8DQCh. 13 - Prob. 9DQ
Ch. 13 - Prob. 10DQCh. 13 - Prob. 11DQCh. 13 - Prob. 12DQCh. 13 - Prob. 13DQCh. 13 - Prob. 14DQCh. 13 - Prob. 1PCh. 13 - Prob. 2PCh. 13 - The president of Hill Enterprises, Terri Hill,...Ch. 13 - Prob. 4PCh. 13 - Prob. 5PCh. 13 - Prob. 6PCh. 13 - Consuelo Chua, Inc., is a disk drive manufacturer...Ch. 13 - Prob. 8PCh. 13 - Prob. 9PCh. 13 - Prob. 10PCh. 13 - Prob. 11PCh. 13 - Southeast Soda Pop, Inc., has a new fruit drink...Ch. 13 - Ram Roys firm has developed the following supply,...Ch. 13 - Jerusalem Medical Ltd., an Israeli producer of...Ch. 13 - Prob. 15PCh. 13 - Prob. 16PCh. 13 - Prob. 17PCh. 13 - Prob. 18PCh. 13 - Dwayne Cole, owner of a Florida firm that...Ch. 13 - Prob. 20PCh. 13 - Prob. 21PCh. 13 - Prob. 22PCh. 13 - Prob. 23PCh. 13 - Prob. 24PCh. 13 - Prob. 25PCh. 13 - Prob. 26PCh. 13 - Evaluate the various configurations of operating...Ch. 13 - Prob. 2CSCh. 13 - After researching revenue (yield) management in...Ch. 13 - The Magic used its original pricing systems of...Ch. 13 - Prob. 1.3VC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- Eastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web-site construction is estimated to be $170,000. Variable processing costs are estimated to be $5 per book. The publisher plans to sell single-user access to the book for $45. (a) Build a spreadsheet model in Excel to calculate the profit/loss for a given demand. What profit can be anticipated with a demand of 3,700 copies? For subtractive or negative numbers use a minus sign. $ (b) Use a data table to vary demand from 1,000 to 6,000 in increments of 200 to test the sensitivity of profit to demand. Breakeven occurs where profit goes from a negative to a positive value, that is, breakeven is where total revenue = total cost yielding a profit of zero. In which interval of demand does breakeven occur? (i) Breakeven appears in the interval of 3,800 to 4,000 copies. (ii) Breakeven appears in the interval of…arrow_forwardMicromedia offers computer training seminars on a variety of topics. In the seminars each student works at a personal computer, practicing the particular activity that the instructor is presenting. Micromedia is currently planning a two-day seminar on the use of Microsoft Excel in statistical analysis. The projected fee for the seminar is $600 per student. The cost for the conference room, instructor compensation, lab assistants, and promotion is $9600 per 2 days. Micromedia rents computers for its seminars at a cost of $120 per computer per day. Micromedia has forecasted an enrollment of 30 students for the seminar. Develop a model for total profit if X students enroll. How much profit will be earned if their forecast is accurate? show the work.Compute the breakeven point.arrow_forwardA $45,000 investment in a new conveyor system is projected to improve throughput and increasing revenue by $14,000 per year for five years. The conveyor will have an estimated market value of $4,000 at the end of five years. Using NPV with a MARR of 12%, is this a good investment?arrow_forward
- A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads, at a pay rate of $12 per hour per employee. Each employee identifies an average of 3,400 potential leads a week from a list of 4,600. An average of 6 percent of potential leads actually sign up for the service, paying a one-time fee of $80. Material costs are $1,500 per week, and overhead costs are $9,300 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input.arrow_forwardEastman Publishing Company is considering publishing an electronic textbook about spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and web-site construction is estimated to be $150,000. Variable processing costs are estimated to be $7 per book. The publisher plans to sell single-user access to the book for $49. (a) Build a spreadsheet model in Excel to calculate the profit/loss for a given demand. What profit can be anticipated with a demand of 3,400 copies? For subtractive or negative numbers use a minus sign. $ (b) Use a data table to vary demand from 1,000 to 6,000 in increments of 200 to test the sensitivity of profit to demand. Breakeven occurs where profit goes from a negative to a positive value, that is, breakeven is where total revenue = total cost yielding a profit of zero. In which interval of demand does breakeven occur? (i) Breakeven appears in the interval of 3,000 to 3,200 copies. (ii)…arrow_forwardHotel Galway is a 50 room Boutique hotel in a pop-ular city break destination in Ireland. Until recently the hotel has priced each room at $120 for bed and breakfast. On aver-age 40 rooms are occupied every weekend. The variable cost of each occupied room is $30. Following an internal review man-agement has decided to try a revenue management approach, with rooms priced at $90 for bookings up to one week early and $180 for bookings within a week of their stay. It is esti-mated the hotel will sell 28 rooms at the lower price and 14 at the higher price. Variable costs will not change. Recommendwhich approach is the most feasible.arrow_forward
- Airspace Airlines is a regional passenger airline operating in the southeastern United States. It operates as an independent airline between certain origin/destination pairs but also operates as a contract carrier for Delta out of the Atlanta airport. Airspace currently has a fleet of aging turboprop aircraft with an average capacity of 35 passengers. The aver- age trip length for Airspace is 250 miles. Airspace employs only Airline Pilot Association union pilots. Jim Gray is the vice president of operations for Airspace and is faced with the chal- lenge of minimizing the impacts of fuel and labor costs on Airspace operating profits. The operating cost per seat mile for his fleet of aircraft is approximately $0.12. Mainte- nance costs are 15 percent of operating costs and are higher than the industry average. Pilot wages average $45 per hour. Airspace averages 50 departures per day out of the Atlanta airport. Delta has approached Airspace about increasing the number of departures it…arrow_forwardAirspace Airlines is a regional passenger airline operating in the southeastern United States. It operates as an independent airline between certain origin/destination pairs but also operates as a contract carrier for Delta out of the Atlanta airport. Airspace currently has a fleet of aging turboprop aircraft with an average capacity of 35 passengers. The aver- age trip length for Airspace is 250 miles. Airspace employs only Airline Pilot Association union pilots. Jim Gray is the vice president of operations for Airspace and is faced with the chal- lenge of minimizing the impacts of fuel and labor costs on Airspace operating profits. The operating cost per seat mile for his fleet of aircraft is approximately $0.12. Mainte- nance costs are 15 percent of operating costs and are higher than the industry average. Pilot wages average $45 per hour. Airspace averages 50 departures per day out of the Atlanta airport. Delta has approached Airspace about increasing the number of departures it…arrow_forwardAirspace Airlines is a regional passenger airline operating in the southeastern United States. It operates as an independent airline between certain origin/destination pairs but also operates as a contract carrier for Delta out of the Atlanta airport. Airspace currently has a fleet of aging turboprop aircraft with an average capacity of 35 passengers. The aver- age trip length for Airspace is 250 miles. Airspace employs only Airline Pilot Association union pilots. Jim Gray is the vice president of operations for Airspace and is faced with the chal- lenge of minimizing the impacts of fuel and labor costs on Airspace operating profits. The operating cost per seat mile for his fleet of aircraft is approximately $0.12. Mainte- nance costs are 15 percent of operating costs and are higher than the industry average. Pilot wages average $45 per hour. Airspace averages 50 departures per day out of the Atlanta airport. Delta has approached Airspace about increasing the number of departures it…arrow_forward
- A company offers ID theft protection using leads obtained from client banks. Three employees work 40 hours a week on the leads, at a pay rate of $12 per hour per employee. Each employee identifies an average of 3,400 potential leads a week from a list of 4,800. An average of 7 percent of potential leads actually sign up for the service, paying a one-time fee of $90. Material costs are $1,400 per week, and overhead costs are $8,900 per week. Calculate the multifactor productivity for this operation in fees generated per dollar of input. (Round your answer to 2 decimal places.) Do you have any suggestions for increasing the productivity of the three employees or for this task?arrow_forwardA real estate agent is considering changing her cell phone plan. There are three plans to choosefrom, all of which involve a monthly service charge of $20. Plan A has a cost of $.45 a minute fordaytime calls and $.20 a minute for evening calls. Plan B has a charge of $.55 a minute for daytime calls and $.15 a minute for evening calls. Plan C has a flat rate of $80 with 200 minutes ofcalls allowed per month and a charge of $.40 per minute beyond that, day or evening.a. Determine the total charge under each plan for this case: 120 minutes of day calls and 40 minutes of evening calls in a month.arrow_forwardEastman Publishing Company is considering publishing a paperback textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and production setup is estimated to be $60,000. Variable production and material costs are estimated to be $3 per book. Demand over the life of the book is estimated to be 3800 copies. The publisher plans to sell the text to college and university bookstores for $18 each. What is the breakeven point? What profit or loss can be anticipated with a demand of 3800 copies? With a demand of 3800 copies, what is the minimum price per copy that the publisher must charge to break even? If the publisher believes that the price per copy could be increased to $21.95 and not affect the anticipated demand of 3800 copies, what action would you recommend? What profit or loss can be anticipated?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY