EBK OPERATIONS MANAGEMENT
EBK OPERATIONS MANAGEMENT
11th Edition
ISBN: 8220103630726
Author: RENDER
Publisher: PEARSON
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Chapter 5, Problem 15P
Summary Introduction

To select: The best decision based on Expected Monetary Value (EMV) criterion at company MD.

Introduction: TheExpected Monetary Value (EMV) is a system for calculating the expected returns for certain decisions made by a company.

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QUESTION #1 Mrs. Johnson, the owner of a small manufacturing business has patented a new device for kitchen appliance. Before trying to commercialize the device and add it to her existing product line, the she wants reasonable assurance of success. Variable costs are estimated at $8 per unit produced and sold. Fixed costs are about $60,000 per year. a. Forecasted sales for the first year are 15,000 units if the price is reduced to $20. With this pricing strategy, what would be the product's total contribution to profits in the first year? b. If the selling price is set at $30, how many units must be produced and sold to break even? Use both algebraic and graphic approaches
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