Spreadsheet Modeling and Decision Analysis: A Practical Introduction to Business Analytics
7th Edition
ISBN: 9781285418681
Author: Cliff Ragsdale
Publisher: Cengage Learning
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Chapter 4, Problem 10QP
Summary Introduction
To determine: The sensitivity report using solver.
a)
Summary Introduction
To determine: The change in the optimal solution when the profit of doors increased to $700.
b)
Summary Introduction
To determine: The change in the optimal solution when the profit of windows decreased to $200.
c)
Summary Introduction
To determine: The shadow price for the finishing process.
d)
Summary Introduction
To determine: The additional profit that the firm can earn with 20 additional hours of cutting capacity.
e)
Summary Introduction
To determine: The change in the solution for the given information.
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A production plant has the capacity to produce 2,000 tons per year. At full capacity, there are total variable costs of $2,000,000 and fixed costs of $700,000. Solve, a. What is the annual profit for the plant when working at full capacity (2,000 tons) and the product sells for $0.80 per pound? b. What is the fixed cost per pound at the breakeven point? c. What is the total cost per pound at full capacity?
PROBLEM
The management of the Book Warehouse Company wishes to apply the Miller-Orr model to manage its cash investment. They have determined that the cost of either investing in or selling marketable securities is $100. By looking at Book Warehouse’s past cash needs, they have determined that the variance of daily cash flows is $20,000. Book Warehouse’s opportunity cost of cash, per day, is estimated to be 0.03%. Based on experience, management has determined that the cash balance should never fall below $10,000.
1. How much is the cost per transaction?(Use a number, no decimal value, no commas, no currency, no space) *
2. How much is the return point based on the Miller-Orr model of cash management? (Use a number, no decimal value, no commas, no currency, no space) *
3. How much is the upper limit based on the Miller-Orr model of cash management?(Use a number, no decimal value, no commas, no currency, no space) *
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Q1. A builder has located a piece of property that she would like to but and eventually build on. The land is currently zoned for four homes per acre, but she is planning to request new zoning. What she builds depends on approval of zoning requests and your analysis of this problem to advise her. With her input and your help, the decision process has been reduced to the following costs, alternatives, and probabilities
Cost of land $2 MillionProbability of rezoning .6If the land is rezoned, there will be additional costs for new roads, lighting, and so on of $1 million.
If the land is rezoned, the contractor must decide whether to build a shopping center or 1,500 apartments that the tentative plan shows would be possible. If she builds a shopping center, there is a 70% chance that she can sell the shopping center to a large department store chin for $4 million over her construction cost, which excludes the land; and there is a 30% chance that she can…
Chapter 4 Solutions
Spreadsheet Modeling and Decision Analysis: A Practical Introduction to Business Analytics
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