IE 343 Fall 2009
Name: _______________________
Student ID: ___________________
1
IE 343 Midterm 1.
Sep 23
rd
, 2009
Closed Book, Closed Notes
Show all of your work
. Your work and answers must be shown on the pages provided.
Write your name and student ID in the spaces provided above.
For
problems 4 and 7,
note that no interest tables are required; you are to carry your
answer to the point where the equation for each problem is specified –e.g.,
“1,000(A/P, 10%, 5)+1,500+200(A/F, 10%, 5)”
and stop here. Your grade on this problem will be based on the correctness of the
equation and the clarity of your work leading up to the equation.
For
problems 2, 3, 5 and 6
, interest tables are required and provided for you to perform
your calculations.
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Name: _______________________
Student ID: ___________________
2
1. A company produces a memory chip that is used in manufacturing cell phones. The fixed
cost is $16,000 per month, and the variable cost is $40 per chip. The selling price per unit is
P=$200 – 0.025D, where D is monthly demand. Maximum output of the plant is 3,600
units per month.
a) Determine the demand quantity that maximizes profit.
8 points
TR = 200D – 0.025D
2
TC = 16000 + 40D
Π
= TR – TC = 160D – 0.025D
2
– 16000
D
*
= 3200
b) What is the breakeven level of the firm?
5 points
We have 0.025D
2
– 160D + 16000 = 0. Solving quadratically, D = 102 or 6298. Since
maximum output is 3,600, breakeven can only occur at D = 102.
c) What is the range of profitable demand?
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 Fall '08
 Vincent,G

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