Practice_Problems_for_Exam10

Practice_Problems_for_Exam10 - IE343A Engineering Economics...

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IE343A Engineering Economics (Fall 2008) The first mid-term examination (ARMS 1010, 2:30-3:30pm, Oct 6, 2008) Questions for the first mid-term examination will be taken mostly from Examples and proofs (for extra points) covered in class, homework , and practice problems. Problem numbers shown in parenthesis refer to the 14 th Edition. Problems for Chapter 5 will be posted later. Chapter 2 1 (2-14) – A large wood products company is negotiating a contract to sell plywood overseas. The fixed cost that can be allocated to the production of plywood Is $900,000 per month. The variable cost per thousand board feet is $131.50. The price charged will be determined by P = $600 – (0.05)D per 1,000 board feet. 2 (2-15 – A company produces and sells a consumer product and is able to control the demand for the product by varying the selling price. The approximate relationship between the price and demand is P = $38 + 2700/D – 5,000/D 2, for D > 1 Where p is the price per unit in dollars and D is the demand per month. The company is seeking to maximize its profit. The fixed cost is $1,000 per month and variable cost ( c v ) is $40 per unit. 3 (2-24) – The fixed cost for a steam line per meter of pipe is $450 X + $50 per year. The cost for loss of head from the pipe per meter is $4.8/X 1/2 per year. Here X represents the thickness of insulation in meters, and X is a continuous design variable. 4 (2-43) Ocean water contains 0.9 ounce of gold per ton. Method A costs $220 per ton of water processed and will recover 85% of the metal. Method B costs $160 per ton of water processed and will recover 65% of the metal. The two methods require the same investment and are capable of producing the same amount of gold each day. If the extracted gold can be sold for $350 per ounce, which method of extraction should be used? Assume that the supply of ocean water is unlimited. Work this problem on the basis of profit per ounce of gold extracted. 5 (2-44) Which of the following statements are true and which are false? (all sections) a- Working capital is a variable cost. b- The greatest potential for cost savings occurs in the operation phase of the life cycle.
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c- If the capacity of operation is significantly changed (e.g., a manufacturing plant), the fixed cost will also change. d- A noncash cost is a cash flow. e- Goods and services have utility because they have the power to satisfy human wants and needs. f- The demand for necessities is more inelastic than the demand for luxuries. g- Indirect costs can normally be allocated to a specific output or work activity.
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This note was uploaded on 09/09/2009 for the course IE 343 taught by Professor Vincent,g during the Spring '08 term at Purdue University-West Lafayette.

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Practice_Problems_for_Exam10 - IE343A Engineering Economics...

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