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chapter7solutions

# chapter7solutions - CHAPTER 7 END-OF-CHAPTER PROBLEMS 7.5...

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CHAPTER 7 END-OF-CHAPTER PROBLEMS 7.5 utilization = actual design capacity = = 5 000 7 000 0 7143 71% , , . 7.6 efficiency = actual effective capacity or = = 4 500 5 000 0 9 90% , , . 7.7 effective capacity = actual planned output designed capacity or actual planned output 7,000 . ( 29 = ( 29 0 80 . So, planned output = 5 600 , 7.8 effective capacity = actual planned output designed capacity or 800 design ( 29 = 0 93 . . Thus, design = = 800 0 93 860 . 7.9 efficiency = actual effective capacity or 500 effective capacity 0 80 . = . Thus, effective capacity = 500 0 80 625 . = 7.10 anticipated output (Design capacity) Effective capacity Efficiency chairs = × ( 29 × ( 29 = × × = 108 0 80 0 90 77 76 78 . . . 7.12 Design: 93 600 0 92 0 95 81806 , . . , × × = Fabrication: 156 000 0 95 103 152 646 , . . , × × = Finishing: 62 400 0 96 105 62 899 , . . , × × = 7.15 Lo Hi 600,000 – 300,000 Sales revenue Cost for process Large line – 150,000 Extra cost to expand Net profit (1/3) (2/3) (200,000) = 300,000 300,000 – 300,000 = 0 Expand 500,000 – 200,000 Do not expand (2/3) (200,000) = 150,000 400,000 – 200,000 = 200,000 (1/3) (100,000) 300,000 – 200,000 = 100,000 Lo Hi Small line Prefer to build a large line. Large line has a payoff of \$200,000. Small line has a payoff of \$133,333+33,333 = \$166,666. 7.16 (a) Proposal A breakeven in units is: Chapter 7: Process Strategy and Capacity Planning 1

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Fixed cost units SP VC - = - = = 50 000 20 12 50 000 8 6 250 , , , (b) Proposal B breakeven in units is: Fixed cost units SP VC - = - = = 70 000 20 10 70 000 10 7 000 , , , 7.17 (a) Proposal A breakeven in dollars is: Fixed cost 1 50 000 1 50 000 0 40 000 12 20 - = - = = VC SP , , . \$125, (b) Proposal B breakeven in dollars is: BEP VC SP \$ , , . \$140, = - = - = = Fixed cost 1 70 000 1 70 000 0 50 000 10 20 7.18 Set Proposal A = to Proposal B ( ) ( ) ( ) , ( ) , ( ) , ( ) , ( ) + , ( ) , , , SP VC X F SP VC X F X X X X X X X X X X A A A A B B B B - - = - - - - = - - - = - = = - = = 20 12 50 000 20 10 70 000 8 50 000 10 70 000 8 20 000 10 20 000 10 8 20 000 2 10 000 7.19 (a) Proposal A: Profit at 8,500 units Profit = ( ) SP VC X F - - @ 8,500 for Proposal A: ( ) , , = , @ 8,500 for Proposal B: ( ) , , = , 20 12 8 500 50 000 18 000 20 10 8 500 70 000 15 000 - - - - Proposal A is best.
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