MOD3_274-276 - 72106 MOD03 GGS 3/30/05 2:43 PM Page 274 M O...

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274 T EACHING S UGGESTIONS Teaching Suggestion M3.1: Reviewing the Normal Curve. Most of the material in this supplement requires the use of the nor- mal curve. A review of the basic principles of the normal curve found in the probability chapter (Chapter 2) would be helpful be- fore this module is started. Teaching Suggestion M3.2: Covering Break-Even Analysis First. Covering break-even calculations Frst helps students get into deci- sion theory and normal curve analysis. This material will also help students get back into the fundamental principles of normal curve theory. Once break-even analysis has been mastered by students, they should be ready for the rest of the material in this module. Teaching Suggestion M3.3: Spending More Time on EVPI and the Normal Distribution. EVPI and the normal distribution concepts are difFcult for many students. You may need to spend more time on this topic and rein- force the basic steps involved. Some instructors reduce coverage or eliminate this topic. S OLUTIONS TO Q UESTIONS AND P ROBLEMS M3-1. The purpose of break-even analysis is to help a manager determine at what point overall revenue will equal overall cost. It can also help the manager to determine at a certain sales volume what revenues will be generated. This knowledge can assist the
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MOD3_274-276 - 72106 MOD03 GGS 3/30/05 2:43 PM Page 274 M O...

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