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Please show your work when you answer the questions, if thequestions require using Excel Solver, please take a screen shot ofthe spreadsheets and then answer the questions.1.COST-VOLUME-PROFIT MODELYou are hired as an operations consultant for a company to work on strategic capacity planningfor a new manufacturing plant. The company provided you the following information: The plantwill be producing 3 different UHD TV semiconductor chips which are simply called as C1, C2 andC3. The marketing department forecast the expected demand and reported them in thefollowing table for each product:ProductAnnual Expected DemandC120000C216000C332000Table-Q3-1. Annual expected demand for each semiconductor chip.The production of these products can be done on three different machines. You can decide onbuying only one type of machine but surely you can buy multiple of the chosen type to satisfy atleast the annual expected demand. Machines operate 10 hours a day, 250 days a year. LA 511has an annual fixed cost of $45,000, LB 511 has an annual fixed cost of $32,000 and LC 511 hasan annual fixed cost of $38,000.The time to produce a product (processing times) is different on each machine and for eachproduct. The processing times in minutes on each machine are given as follows:Processing times per unit (minutes)ProductLA 511LB 511LC 511C1711C2911C31015Table-Q3-3. Processing time per unit of semiconductor chip on twodifferent machines.9913
The revenues are so high that you do not need to consider the breakeven point and instead giveyour decision based on total cost incurred. Your analysis requires you to answer the followingquestions:a)(3 points) Determine the minimum number of each type of machine to satisfy thedemand, assuming you purchase only one type of machine. Fill in the table below.Makesure you show all your work.b)(3 points) Calculate the total annual cost of meeting all the demand using each type ofmachine. (Note: Use the minimum number of machines you calculated in part a.) Whichtype of machine has the lowest total annual cost? Fill in the table below.Make sure youshow all your work.c)(3 point) If you purchase the minimum number of machines needed as in part (a), whatwill be the annual capacity utilization of the machines?Compute the utilizationseparately for each option. Fill in the table below.Make sure you show all your work.d)(3 points) After you are done with your analysis in part a and b, you realized thatmachines differ in hourly operating costs: Each LA 511 machine has an hourlyoperatingcost of $12, each LB 511 machine has an hourlyoperating cost of $8 and each LC 511machine has an hourlyoperating cost of $10. Which type of machine has the minimumtotal cost while satisfying the demand? Fill in the table below.Make sure you show allyour work.e)(2 points) Based on the limited information given about the company, will the factoryhave capacity focus or capacity flexibility? Explain clearly why and provide a detailedanswer.
Type of machine purchasedOnly LA 511Only LB 511Only LC 511a)Minimum number of machinesneeded to meet the annualdemandb)Total cost of using the minimumnumber of machinesc)Annual capacity utilization if theminimum number of machines ispurchasedd)Total cost of using the minimumnumber of machines (includingfixed and variable costs) whenhourly operating costs are differentTable-Q3-4. Minimum number of machines needed and the total cost

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Term
Spring
Professor
miss ayesha
Tags
Optimization, Capacity utilization, optimization problem

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