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OPMA Chapter 3 HW

# OPMA Chapter 3 HW - 100,000 150,000 415,000 Do nothing...

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OPMA Chapter 3: Problems 1, 12, 15, 16, 17 1) Break-Even Analysis| Variable Cost: \$6 and Fixed Costs = \$60,000/yr a. Fixed Cost/ (unit costs – Variable cost) a.i. 60000/(18-6) = 5000 units b. Forecast: 10,000 units; Selling price = \$14/unit Profit = Revenue – Total Costs b.i. Profit = 10000(14) – (10000(6) +60,000) b.ii. 140,000 – 120,000 = \$20,000 c. Forecast: 15,000 if 12.50/unit c.i. 15000(12.50) – [15000(6) + 60000] = 37,500 c.ii. Therefore it would be better to drop the price to 12.50 d. The demand would be pretty crucial for future purposes and the marketing and advertising costs would also be crucial. 12) #12: Part A+B Best = BOLD Worst = Red Bold Cap Equip E(r) on ROI Compat w/ workforce Comp ADV Compat w/EPA Part A Part B Servic e A 0.6 0.7 0.4 1 0.2 58 60 Servic e B 0.8 0.3 0.7 0.4 1 64 58.333 33 Servic e C 0.3 0.9 0.5 0.6 0.5 56 61.666 67 a. Order Rank from best to worst: B, A, C b. Order Rank from best to worst: C, A, B 15) Alternative Low Moderate High Hire -250,000 100,000 625,000 Subcontract

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Unformatted text preview: 100,000 150,000 415,000 Do nothing 50,000 80,000 300,000 a. Maximin = Red Bold Subcontract b. Maximax = Blue Bold Hire c. Laplace = Subcontract [Since equal weighted you can just add and divide by 3) i. Hire: (-250 +100+625)/3 = 158,333 ii. Subcontract : (100+150+415)/3 = 221,667 iii. Do Nothing: (50+80+300)/3 = 143,333 d. MiniMax Report = Subcontract Alternative Low (max = 100,000) Moderate (max = 150,000) High (max = 625,000) Hire-250,000 100,000 625,000 Subcontract 100,000 150,000 415,000 Do nothing 50,000 80,000 300,000 Hire 100,000 – (-250,000) = 350,000 150,000 - 100,000 = 50,000 625,000 -625,000 = Subcontract 100,000 – 100,000 = 150,000 - 150,000 = 625,000 -415,000 = 110,000 Do nothing 100,000 - 50,000 = 50,000 150,000 - 80,000 = 70,000 625,000 -300,000 = 325,000 16) Choose Alternative #2 17) Decision Tree a. (on picture) b. Machine 2 with a payoff of \$162,000...
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OPMA Chapter 3 HW - 100,000 150,000 415,000 Do nothing...

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