Ops Mgmt 8e ch07pp Sup

# Ops Mgmt 8e ch07pp Sup - Practice Problems: Supplement 7,...

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Practice Problems: Supplement 7, Capacity Planning Problem 1: The design capacity for engine repair in our company is 80 trucks/day. The effective capacity is 40 engines/day and the actual output is 36 engines/day. Calculate the utilization and efficiency of the operation. If the efficiency for next month is expected to be 82%, what is the expected output? Problem 2: Given: fixed cost \$1000 F = = variable cost \$2/ unit V = = selling price \$4/ unit P = = Find the break-even point in \$ and in units. Problem 3: Develop the break-even chart for Problem 2. Problem 4: Jack’s Grocery is manufacturing a “store brand” item that has a variable cost of \$0.75 per unit and a selling price of \$1.25 per unit. Fixed costs are \$12,000. Current volume is 50,000 units. The Grocery can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of \$5,000. Variable cost would increase to \$1.00, but their volume should increase to 70,000 units due to the higher quality product. Should the company buy the new

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## Ops Mgmt 8e ch07pp Sup - Practice Problems: Supplement 7,...

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