Opma Test 1 Solutions

# Opma Test 1 Solutions - Name OPMA 3306 Section 571 Test...

This preview shows pages 1–3. Sign up to view the full content.

Name: __________________________ OPMA 3306, Section 571 Test 1 (Chapters 1, 2, 3, 9, & Supplement A) Feb 23, 2006 Possible Points = 100 1. A manufacturing firm is considering whether to produce or subcontract the production of a new product. The estimated fixed costs associated with this new product are \$100,000 per year. The projected price is \$25 per unit, and the variable cost of production is \$7.50. An alternative is to subcontract the production of this product. The fixed cost associated with subcontracting is negligible and is assumed to be zero. The variable costs for subcontracting are \$15.00 per unit. a. What is the break-even quantity between these two options? (5 pts) F M = \$100,000 F B = \$0 C M = \$7.50/Unit C B = \$15.00/Unit b. If expected demand is 25,000 units, should you make the product yourself, or subcontract it? (5 pts) Make. TC M = F M + QC M = \$100,000 + 25,000(\$7.50) = 100,000 + 187,500 = \$287,500 TC B = F B + QC B = \$0 + 25,000(\$15) = 0 + 375,000 = \$375,000 334 , 13 333 , 13 5 . 7 000 , 100 5 . 7 15 0 000 , 100 = = - - = - - = B M M B C C F F Q

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
2. Consider the tasks, durations, and predecessor relationships in the following network. a. Calculate the expected duration and variance for each activity (T E ). (10 pts) 6 4 p m a T E + + = 2 2 6 - = a p σ b. Draw the network. (5 pts) Activity Immediate Predecessor(s) Optimistic (Weeks) Most Likely (Weeks) Pessimistic (Weeks) T E 2 σ A --- 8 12 16 12 1.777778 B
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern