Break even analysis practice problems solutions

Break Even Analysis Practice Problems Solutions
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Unformatted text preview: BMGT 322 - Operations Management Break-Even Analysis Practice Problem IV Solution The following diagram shows a 4-step process that begins with Operation 1 and ends with Operation 4. The rates shown in each box represent the effective capacity of that operation. Operation 1 12 / hr. Operation 2 15 / hr. Operation 3 11 / hr. Operation 4 14 / hr. a. Determine the capacity of this entire process. The capacity of the entire process is that of the lowest individual capacity, that of Operation 3, or 11 units/hour. b. Which action would yield the greatest increase in process capacity? 1) Increase the capacity of Operation 1 by 15% 2) Increase the capacity of Operation 2 by 10% 3) Increase the capacity of Operation 3 by 10% Increasing Operation 1 or 2 would not be effective unless Operation 3 is increased first as Operation 3 is the bottleneck. Increasing Operation 3 by 10% would increase it to 11*1.1 = 12.1 units per hour ...
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