11. There are two logistics network systems. Company JYZ is currently applying system 1 for the distribution and warehousing of its raw materials. In system 1, the raw materials are shipped from suppliers to the warehouse, where sorting is implemented. The materials are then shipped from the warehouse to the customers. JYZ is now thinking of implementing system 2, where raw materials are shipped from suppliers directly to the customers. The costs of both systems are provided below (per quarter). The cost formula is y = a + x(b₁ + b₂ + b3), where bbb3 are the unit cost for handling, logistics, and sorting. System 1 System 2 Fixed cost $2000 $1000 Variable cost Variable cost (handling per unit) (logistics per unit) $0.02 $0.01 $0.01 $0.05 Variable cost (Sorting per unit) $0.03 $0.01 y=a+b(x1+x2 + x3) a. What is the breakeven point for the two systems to have identical total cost? b. The total number of units of JYZ is 90,000. Given the total unit 90,000, do you think it will be worth it if company JYZ switches from system 1 to system 2?
11. There are two logistics network systems. Company JYZ is currently applying system 1 for the distribution and warehousing of its raw materials. In system 1, the raw materials are shipped from suppliers to the warehouse, where sorting is implemented. The materials are then shipped from the warehouse to the customers. JYZ is now thinking of implementing system 2, where raw materials are shipped from suppliers directly to the customers. The costs of both systems are provided below (per quarter). The cost formula is y = a + x(b₁ + b₂ + b3), where bbb3 are the unit cost for handling, logistics, and sorting. System 1 System 2 Fixed cost $2000 $1000 Variable cost Variable cost (handling per unit) (logistics per unit) $0.02 $0.01 $0.01 $0.05 Variable cost (Sorting per unit) $0.03 $0.01 y=a+b(x1+x2 + x3) a. What is the breakeven point for the two systems to have identical total cost? b. The total number of units of JYZ is 90,000. Given the total unit 90,000, do you think it will be worth it if company JYZ switches from system 1 to system 2?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
![11. There are two logistics network systems. Company JYZ is currently applying system 1 for the
distribution and warehousing of its raw materials. In system 1, the raw materials are shipped from
suppliers to the warehouse, where sorting is implemented. The materials are then shipped from the
warehouse to the customers. JYZ is now thinking of implementing system 2, where raw materials are
shipped from suppliers directly to the customers. The costs of both systems are provided below (per
quarter). The cost formula is y=a+x(b₁ + b₂ + b3), where b₁,b2b3 are the unit cost for handling,
logistics, and sorting.
System 1
System 2
Fixed cost
$2000
Variable cost
Variable cost
Variable cost
(handling per unit) (logistics per unit) (Sorting per unit)
$0.02
$0.01
$0.03
$0.01
$0.01
$0.05
y = a + b(x1+x2+x3)
a. What is the breakeven point for the two systems to have identical total cost?
b. The total number of units of JYZ is 90,000. Given the total unit 90,000, do you think it will be worth it
if company JYZ switches from system 1 to system 2?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F01a5aba2-c24c-4e6e-84b8-c3a44ed96bbd%2Fce9e2cc1-3fa1-40c4-8434-2f93c79b7d7d%2Fmmjsbih_processed.jpeg&w=3840&q=75)
Transcribed Image Text:11. There are two logistics network systems. Company JYZ is currently applying system 1 for the
distribution and warehousing of its raw materials. In system 1, the raw materials are shipped from
suppliers to the warehouse, where sorting is implemented. The materials are then shipped from the
warehouse to the customers. JYZ is now thinking of implementing system 2, where raw materials are
shipped from suppliers directly to the customers. The costs of both systems are provided below (per
quarter). The cost formula is y=a+x(b₁ + b₂ + b3), where b₁,b2b3 are the unit cost for handling,
logistics, and sorting.
System 1
System 2
Fixed cost
$2000
Variable cost
Variable cost
Variable cost
(handling per unit) (logistics per unit) (Sorting per unit)
$0.02
$0.01
$0.03
$0.01
$0.01
$0.05
y = a + b(x1+x2+x3)
a. What is the breakeven point for the two systems to have identical total cost?
b. The total number of units of JYZ is 90,000. Given the total unit 90,000, do you think it will be worth it
if company JYZ switches from system 1 to system 2?
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