How to prepare for Exam 2 with solutions (Fall 13).pdf

# How to prepare for Exam 2 with solutions (Fall 13).pdf -...

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MBA 548 Operations Management Fall 2013 Peter Bodo How to prepare for Exam 2? Suggestions I. Read and study the assigned chapters (5, S5, 7, S7, 8), the PPoint lecture notes (incl. Game Theory), other handouts, game theory website and your own notes II. Answer the Discussion and Review Questions at the end of the above chapters III. Study your solutions of the homework problems IV. Practice by solving the following problems: 1. An investment proposal will have annual fixed costs of \$60,000, variable costs of \$35 per unit of output, and revenue of \$55 per unit of output. (A) Determine the break-even quantity. (3000) (B) What volume of output will be necessary for an annual profit of \$60,000? (6000) 2. A small business owner is contemplating the addition of another product line. Capacity increases and equipment will result in an increase in annual fixed costs of \$50,000. Variable costs will be \$25 per unit. A) What unit selling price must the owner obtain to break-even on a volume of 2,500 units a year? (\$45) B) Because of market conditions, the owner feels a revenue of \$47 is preferred to the value determined in part a. What volume of output will be required to achieve a profit of \$16,000 using this revenue? (3000) 3. The advertising manager for Roadside Restaurants, Inc. needs to decide whether to spend this

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