Quantitative_methods_ Assignment1.docx - Problem solutions 1 I Chicken eggs BEP Fixed cost = 560 20 Selling price per unit = 5 Variable cost per unit =

Quantitative_methods_ Assignment1.docx - Problem solutions...

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Problem solutions 1. I. Chicken eggs BEP Fixed cost = 560 + 20 Selling price per unit = 5 Variable cost per unit = 14 pellets for 7 dozens (84 eggs ) = 2 per dozen BEP = 580 / 5-2= 193.33 = 193 dozen 193 dozen is the BEP for chicken eggs Duck eggs BEP Fixed cost = 620 + 20 Selling price per unit = 6 Variable cost = 14 pellets for 9 dozen = 1.5 per dozen BEP = 640 / 6-1.55 = 143.8 = 144 dozen (After roundoff) II. In one month if the chicken started laying eggs immediately then 84 eggs/12 = 7 dozens , which will give profit of \$35 Chicken egg will give profit of 35 -14 (food) - fixed cost \$580 duck profit will be \$54 - \$14 (food)- fixed cost of \$640 \$21X-\$580 = \$40X-\$640 19X=60 X=3.16(rounded off value) So at 3.16 months the profit from chicken eggs will be equal to profit from ducks eggs. 2. Payoff table Demand Order 50 60 70 50 1500 1500 1500 60 1300 1800 1800 70 1100 1300 2100
Probability 0.4 0.5 0.1 Calculating EMV for each option EMV(50)= 1500 EMV(60)= 1600 EMV(70)= 1300 The highest profit 1600 corresponds to 60 Units . Hence 60 units should be ordered. 3. a) Payoff Table Mileage Options 36,000 45,000 54,000 Option 1 11,800 11,800+(9000*0.35) = 14,950 18,100 Option 2 13,680 13,680 15930 Option 3 15,480 15,480 15,480 Probability 0.4 0.3 0.3

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