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HW C5

# HW C5 - than the half of evening time then plan B is better...

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Chapter 05 - Strategic Capacity Planning for products and services 5-1 6. a. Cost for Plan A: \$20 + \$.45(120) + \$.20(40) = \$82 Cost for Plan B: \$20 + \$.55(120) + \$.15(40) = \$92 Cost for Plan C: \$20 + \$80 = \$100 b. c. Plan A is optimal for zero to less than 178 minutes. Plan C is optimal from 178 minutes or more. Plan B is never optimal. d. A: \$20 + \$.45D + \$.20E B: \$20 + \$.55D + \$.15E (1) Setting these equal and solving, D = 0.5E (or 2D = E). Thus, if evening time is double the daytime, e.g., E = 100 minutes and D = 50 minutes, she would be indifferent between the two plans. (2) Setting A < B and solving, we have D > 0.5E. Thus, if the daytime usage is greater than the half the evening time, then plan A is better. However, if D < 0.5E (daytime usage is less

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Unformatted text preview: than the half of evening time), then plan B is better. Minutes of daytime calls \$140 \$120 \$100 \$80 \$60 \$40 \$20 0 200 300 Weekly cost Plan C Plan B Plan A Chapter 05 - Strategic Capacity Planning for products and services 5-2 12. R = \$5.95, VC = \$3. One line would have a fixed cost of \$20 (\$6,000 ÷ 300) per hour and two lines would have a fixed cost of \$35 (\$10,500 ÷ 300) per hour. Volume No. of lines Profit 14 1 \$21.30 = 14 (\$5.95) – (\$20 + \$3*14) 15 1 24.25 = 15 (\$5.95) – (\$20 + \$3*15) 16 2 12.20 = 16 (\$5.95) – (\$35 + \$3*16) 17 2 15.15 = 17 (\$5.95) – (\$35 + \$3*17) 18 2 18.10 = 18 (\$5.95) – (\$35 + \$3*18) Choose one line. Assumption: Little or negligible cost of manufacturing....
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