Principles Of Operations Management
11th Edition
ISBN: 9780135173930
Author: RENDER, Barry, HEIZER, Jay, Munson, Chuck
Publisher: Pearson,
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 7.S, Problem 44P
Summary Introduction
To determine: The machine that must be purchased.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
A builder has located a piece of property that she would like to buy 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 the 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: .60If 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 percent chance that she can sell the shopping center to a large department store chain for $4 million over her construction cost, which excludes the land; and there is a 30 percent chance that she can sell it to an…
Chatham Automotive purchased new electric forklifts to move steel automobile parts two years ago. They cost
$65,000
each, including the charging stand. In practice, it was found that they did not hold a charge as long as claimed by the manufacturer, so operating costs are very high. As a result, their current salvage value is about
$9,000.
Chatham is considering replacing them with propane models. New propane forklifts cost
$58,000
each. After one year, they have a salvage value of
$40,000,
and thereafter decline in value at a declining-balance depreciation rate of
20
percent, as does the electric model from this time on. The MARR is
8
percent. Operating costs for the electric model will be
$19,000
this year, rising by
12
percent per year. Operating costs for the propane model will initially be
$11,000
over the first year, rising by
12
percent per year. Should Chatham Automotive replace the forklifts now?
Find EAC for both propane and elctric forklifts.
P.S. Show…
In considering a capacity expansion, we have two alternatives. The first alternative is expected to cost $1,000,000 and has an expected profit of $500,000 over the next three years. The second alternative has an expected cost of $800,000 and an expected profit of $450,000 over the next three years. Which alternative should we select, and what is the expected value of the expansion? Assume a 10 percent interest rate.
Chapter 7 Solutions
Principles Of Operations Management
Ch. 7.S - Prob. 1DQCh. 7.S - Prob. 2DQCh. 7.S - Prob. 3DQCh. 7.S - Prob. 4DQCh. 7.S - Prob. 5DQCh. 7.S - Distinguish between bottleneck time and throughput...Ch. 7.S - Prob. 7DQCh. 7.S - Prob. 8DQCh. 7.S - Prob. 9DQCh. 7.S - Prob. 10DQ
Ch. 7.S - Prob. 11DQCh. 7.S - Prob. 12DQCh. 7.S - What are the techniques available to operations...Ch. 7.S - Amy Xias plant was designed to produce 7,000...Ch. 7.S - For the post month, the plant in Problem S7.1,...Ch. 7.S - Prob. 3PCh. 7.S - Prob. 4PCh. 7.S - Prob. 5PCh. 7.S - The effective capacity and efficiency for the next...Ch. 7.S - Southeastern Oklahoma State Universitys business...Ch. 7.S - Prob. 8PCh. 7.S - Prob. 9PCh. 7.S - Prob. 10PCh. 7.S - The three-station work cell illustrated in Figure...Ch. 7.S - The three-station work cell at Pullman Mfg., Inc....Ch. 7.S - The Pullman Mfg., Inc., three-station work cell...Ch. 7.S - Prob. 14PCh. 7.S - 10 minutes per unit. Part 2 is simultaneously...Ch. 7.S - Prob. 16PCh. 7.S - Prob. 17PCh. 7.S - Using the data in Problem S7.17: a) What is the...Ch. 7.S - Prob. 19PCh. 7.S - Prob. 20PCh. 7.S - Prob. 21PCh. 7.S - Prob. 22PCh. 7.S - Prob. 23PCh. 7.S - Prob. 24PCh. 7.S - Prob. 25PCh. 7.S - Prob. 26PCh. 7.S - Prob. 27PCh. 7.S - Prob. 28PCh. 7.S - Prob. 29PCh. 7.S - Prob. 30PCh. 7.S - Prob. 31PCh. 7.S - Prob. 32PCh. 7.S - Prob. 33PCh. 7.S - Prob. 34PCh. 7.S - Prob. 35PCh. 7.S - Prob. 36PCh. 7.S - Prob. 37PCh. 7.S - Prob. 38PCh. 7.S - Prob. 39PCh. 7.S - Prob. 40PCh. 7.S - Prob. 41PCh. 7.S - Prob. 42PCh. 7.S - Prob. 43PCh. 7.S - Prob. 44PCh. 7.S - Prob. 45PCh. 7.S - Prob. 1VCCh. 7.S - a capacity expansion plan and a new 11-story...Ch. 7.S - a capacity expansion plan and a new 11-story...Ch. 7 - Ethical Dilemma For the sake of efficiency and...Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 11DQCh. 7 - Prob. 12DQCh. 7 - Prob. 13DQCh. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Prob. 16DQCh. 7 - Prob. 17DQCh. 7 - Prob. 18DQCh. 7 - Prob. 19DQCh. 7 - Prob. 1PCh. 7 - Usingthedatain Problem 7.1, determinethemost...Ch. 7 - Prob. 3PCh. 7 - Refer to Problem 7.1. If a contract for the second...Ch. 7 - Stan Fawcetts company is considering producing a...Ch. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Metters Cabinets, Inc., needs to choose a...Ch. 7 - Prob. 10PCh. 7 - Nagle Electric. Inc., of Lincoln, Nebraska, must...Ch. 7 - Stapleton Manufacturing intends to increase...Ch. 7 - Prepare a flowchart for one of the following: a)...Ch. 7 - Prepare a process chart for one of the activities...Ch. 7 - Prob. 15PCh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 1CSCh. 7 - Prob. 2CSCh. 7 - Prob. 3CSCh. 7 - Process Strategy at Wheeled Coach Wheeled Coach,...Ch. 7 - Prob. 1.2VCCh. 7 - Prob. 1.3VCCh. 7 - Prob. 1.4VCCh. 7 - Alaska Airlines: 20-Minute Baggage...Ch. 7 - Prob. 2.2VCCh. 7 - Prob. 2.3VCCh. 7 - Prob. 2.4VCCh. 7 - Prob. 2.5VCCh. 7 - Prob. 3.1VCCh. 7 - Prob. 3.2VCCh. 7 - Prob. 3.3VCCh. 7 - Prob. 3.4VC
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
- Techno Corporation is currently manufacturing an item at vanable costs of $4 per unit. Annual fixed costs of manufacturing this item are $141,000. The current selling price of the item is $10 per unit, and the annual sales volume is 35,000 units a. Techno can substantially improve the item's quality by installing new equipment at additional annual fixed costs of $55,000 Vanable costs per unit would increase by $1, but, as more of the better-quality product could be sold, the annual volume would increase to 60,000 units. Should Techno buy the new equipment and maintain the current price of the item? Why or why not? because the profit from $to $(Enter your responses an integers)arrow_forwardTechno Corporation is currently manufacturing an item at variable costs of $5 per unit. Annual fixed costs of manufacturing this item are $140,000. The current selling price of the item is $10 per unit, and the annual sales volume is 30,000 units. so Techno can substantially improve the item’s quality by installing new equipment at additional annual fixed costs of $60,000. Variable costs per unit would increase by $1, but, as more of the better-quality product could be sold, the annual volume would increase to 50,000 units. Should Techno buy the new equipment and maintain the current price of the item? Why or why not?arrow_forwardSee the answer A local movie studio wants to determine which of two new scripts they should select for their next major production. The manager feels that script #1 has a 70% chance of earning Php100 million over the long run, but a 30% chance of losing Php20 million. If this movie is successful, then a sequel could also be produced, with an 80% chance of earning Php50 million, but a 20% chance of losing Php10 million. On the other hand, she feels that script #2 has a 60 % chance of earning Php120 million, but a 40% chance of losing Php30 million. If successful, its sequel would have a 50% chance of earning $80 million and a 50% chance of losing Php40 million. As with the first script, if the original movie is a "flop," then no sequel would be produced. What is the expected payoff from selecting script #2?arrow_forward
- A manager must decide how many machines of a certain type to buy. The machines will be used to manufacture a new gear for which there is increased demand. The manager has narrowed the decision to two alternatives: buy one machine or buy two. If only one machine is purchased and demand is more than it can handle, a second machine can be purchased at a later time. However, the cost per machine would be lower if the two machines were purchased at the same time. The estimated probability of low demand is .30, and the estimated probability of high demand is .70. The net present value associated with the purchase of two machines initially is $77,900 if demand is low and $137,100 if demand is high. The net present value for one machine and low demand is $98,000. If demand is high, there are three options. One option is to do nothing, which would have a net present value of $119,680. A second option is to subcontract; that would have a net present value of $115,650. The third option is to…arrow_forwardA builder has located a piece of property that she would like to buy 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 the 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: $5 million. Probability of rezoning: 0.80. If the land is rezoned, there will be additional costs for new roads, lighting, and…arrow_forwardA builder has located a piece of property that she would like to buy 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: $3 million. Probability of rezoning: 0.50. If 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 1,400 apartments that the tentative plan shows would be possible. If she builds a shopping center, there is a 50 percent chance that she can sell the shopping center to a large department store chain for $6 million over her construction cost, which excludes the land; and there is a 50 percent chance that she can sell it…arrow_forward
- A real estate investor has the opportunity to purchase land currently zoned residential. If the county board approves a request to rezone the property as commercial within the next year, the investor will be able to lease the land to a large discount firm that wants to open a new store on the property. However, if the zoning change is not approved, the investor will have to sell the property at a loss. Profits (in thousands of dollars) are shown in the following payoff table: State of Nature Rezoning Approved Rezoning Not Approved Decision Alternative S1 S2 Purchase, d1 590 -160 Do not purchase, d2 0 0 If the probability that the rezoning will be approved is 0.5, what decision is recommended?Recommended decision: What is the expected profit?Expected profit: $ fill in the blank 2 The investor can purchase an option to buy the land. Under the option, the investor maintains the rights to purchase the land anytime during the next three months while learning more…arrow_forwardProjects W, X, Y, and Z are each being screened according to four criteria:Potential Return on Investment, Lack of Technological Risk, Environmental“Friendliness,” and Service to Community:• Project W: Return, high; Risk, medium; Environment, medium; Service, low• Project X: Return, medium; Risk, high; Environment, medium; Service, low• Project Y: Return, medium; Risk, medium; Environment, high; Service, high• Project Z: Return, medium; Risk, medium; Environment, high; Service, low.Create a scheme for screening the projects, assuming equal weight for all criteria.Which project comes out best; which word explain the output of scope with help of figure. How risk been evauted while describing the scope management.arrow_forwardTim Smunt has been asked to evaluate two machines. After some investigation, he determines that they have the costs shown in the following table: Machine A Machine B Original Cost $15,000 $24,000 Labor per year $2,400 $4,800 Maintenance per year $4,300 $1,000 Salvage value $2,400 $7,200 He is told to assume that: 1. The life of each machine is 3 years. 2. The company thinks it knows how to make 14% on investments no more risky than this one. 3. Labor and maintenance are paid at the end of the year. The NPV for Machine A=$nothing (round your response to the nearest whole number and include a minus sign if necessary).arrow_forward
- John Corner, chief engineer of Offshore Chemicals, Inc., have to decide whether to build a new processing facility based on an experimental technology. If the new facility works, the company will realize a net profit of $20 million. If the new facility fails, the company will lose $10 million. Benjamin’s best guess is that there is a 40 percent chance that the new facility will work What decision should Benjamin Moses make?arrow_forwardUse excel and show formulas Benson Enterprises is deciding when to replace its old machine. The machine’s current salvage value is $1.2 million. Its current book value is $1 million. If not sold, the old machine will require maintenance costs of $420,000 at the end of the year for the next five years. Depreciation on theold machine is $200,000 per year. At the end of five years, it will have a salvage value of $220,000. A replacement machine costs $3.5 million now and requires maintenance costs of $160,000 at the end of each year during its economic life of five years. At the end of five years, the new machinewill have a salvage value of $540,000. It will be fully depreciated using the three-year MACRS schedule. In five years a replacement machine will cost $4,000,000. Pilot will need to purchase this machine regardless of what choice it makes today. The corporate tax is 35 percent and theappropriate discount rate is 10 percent. The company is assumed to earn sufficient revenues to…arrow_forwardToday a proposed community college is estimated to cost K795,527,518. which is K2806 persquare foot of space multiplied by 272,310 square feet. If construction costs are expected toincrease by 19% per year because of high demand for construction labor and materials, how muchwould 320,000-square-foot community college cost five years from now?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