In the early 2000s, selected automobiles had an average cost of $15,000. The average cost of
those same automobiles is now $18,000. What was the rate of increase for these
automobiles between the two time periods?
($18,000 - $15,000) / $15,000 = .20 (20 p
The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. FSF
supplies hot dogs to local restaurants at a steady rate of 240 per day. The cost to prepare the
equipment for producing hot dogs is $66. Annual holding co
Using the rule of 72, approximate the following amounts. (Obj. 1)
a. If the value of land in an area is increasing 6 percent a year, how long will it take for
property values to double?
About 12 years (72 / 6)
b. If you earn 10 percent on your investments
A mail-order house uses 16,860 boxes a year. Carrying costs are 60 cents per box a year, and
ordering costs are $96. The following price schedule applies.
Number of Boxes
1,000 to 1,999
2,000 to 4,999
5,000 to 9,999
10,000 or more
A manager just received a new price list from a supplier. It will now cost $1.00 a box for
order quantities of 801 or more boxes, $1.10 a box for 200 to 800 boxes, and $1.20 a box for
smaller quantities. Ordering cost is $80 per order and ca
A drugstore uses fixed-order cycles for many of the items it stocks. The manager wants a
service level of .98. The order interval is 15 days, and lead time is 2 days. Average demand
for one item is 61 units per day, and the standard deviatio
A newspaper publisher uses roughly 890 feet of baling wire each day to secure bundles of
newspapers while they are being distributed to carriers. The paper is published Monday
through Saturday. Lead time is six workdays. What is the appropri
A family spends $34,000 a year for living expenses. If prices increase by 4 percent a year for
the next three years, what amount will the family need for their living expenses after three
1.12 = $38,080; or using Exhibit 1-A: $34,000 1.125
Ben Collins plans to buy a house for $120,000. If that real estate is expected to increase in
value by 5 percent each year, what will its approximate value be seven years from now?
1.35 = $162,000; or using Exhibit 1-A: $120,000 1.407 = $168,840
Using time value of money tables (Exhibit 13 or chapter appendix tables), calculate the
a. The future value of $450 six years from now at 7 percent.
1.501 = $675.45 (Exhibit 1-A)
b. The future value of $800 saved each year for 10 years at