A manufacturer produces three products, A, B, and C. The profits for each unitof A, B, and C sold are $1, $2, and $3, respectively. Fixed costs are $19,000 peryear, and the costs of producing each unit of A, B, and C are $4, $5, and $7,respectively. Next year, a total of 10,000 units of all three products is to beproduced and sold, and a total profit of $22,000 is to be realized. If total cost isto be $76,000, how many units of each of the products should be produced nextyear?units of product A,be produced.units of product B, andunits of product C should

Total Profit of each product = $22,000Total Cost of each product = $76,000Fixed Cost = $19,000 per…

Answered: A manufacturer produces three products,…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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20. The Video Game Supply Company (VGS) is deciding whether to set next year's production at 2000, 2500, or 3000 games. Demand could be low, medium, or high. Using historical data, VGS estimates the probabilities as: 0.4 for low demand, 0.3 for medium demand, and 0.3 for high demand. The following profit payoff table (in $100s) has been developed. Demand Production Target Low Medium High 2000 games 2500 games 3000 games 1000 1200 1400 800 1500 1300 600 1700 1400 (a) [1] What is the maximax decision alternative? (b) [1] What is the maximin decision alternative? (c) [2] Determine the expected value of each alternative and indicate what should be the production target for next year based on expected value. (d) [1] Determine the expected value with perfect information about the states of nature. (e) [1] Determine the expected value of perfect information.
5. Meg Jones, the CEO of Ajax Computer Company, and Brad Smith, its Director of Operations, had been discussing how to increase the firm’s production of the company’s flagship XR58. The XR58 was particularly important because it sold 12,500 of them in the most recent year for $950, at a gross margin of 55%. After a lot of discussion, they decided to pursue an incentive system designed to increase production by 12% in the next year. After Brad discussed this possible incentive with the production team, the team determined that it could increase production by this amount without adding any more people or equipment. They believed they could accomplish this improvement primarily through process redesign. To incent them to do the hard work of process improvement, Brad told the team that it would receive 25% of the increased profits if it met the new production goal. For this team of 20 people, this would mean an additional compensation of _________ for each team member, on average, for…
(d) The company only has 4 workstations available. If it only operates its 4stations, how many weeks does it need to meet the production requirements?(e) The company has other contracts it needs to satisfy. Working on themugs more than 4 weeks means it will have to cancel another contract,incurring a penalty of $4,500. Each new workstation costs the company$2,500. What should the company do: cancel the contract or buy therequired workstations?
The White Fish company is launching its new food for sale in supermarkets throughout Illinois. The sales department is convinced that its spicy fish dip will be a great success. The marketing department is considering an intensive advertising campaign. The advertising campaign will cost $1,900,000 and if successful (70% chance) produce $9,600,000 in added revenue. If the campaign is less successful (30% chance), the added revenue is estimated at only $4.200,000. If no advertising is used, the revenue is estimated at $6,500,000 if customers are receptive (with probability 0.75) and $3.200,000 with probability 0.25 if they are not receptive. a. Draw the associated decision tree. b. Roll Back Tree: Should White Fish invest in an intensive advertising campaign? c. Perform sensitivity analysis on probability of successful advertising campaign, which is now 0.7. Detemine the range of the probability of success for which the current decision is still the best choice. d. Perform sensitivity…
Anand Publishing Company received a six-chapter manuscript for a new college textbook. The editor of the college division is familiar with the manuscript and estimated a 0.6513 probability that the textbook will be successful. If successful, a profit of $950,000 will be realized. If the company decides to publish the textbook and it is unsuccessful, a loss of $150,000 will occur. Before making the decision to accept or reject the manuscript, the editor is considering sending the manuscript out for review. A review process provides either a favorable (F) or an unfavorable (U) evaluation of the manuscript. Past experience with the review process suggests probabilities P(F) = 0.7 and P(U) = 0.3 apply. Let s₁ = the textbook is successful, and $₂ = the textbook is unsuccessful. The editor's initial probabilities of s₁ and s₂ will be revised based on whether the review is favorable or unfavorable. The revised probabilities are as follows: P(S₁IF): = 0.75 P(S₂IF): = 0.25 P(S₁IU) = 0.421…
Cool Beans is a locally owned coffeeshop that competes with two large coffee chains, PlanetEuro and Frothies. Alicia, the owner, is considering two different marketing promotions and thinks that CLV analysis will help her decide the best course of action. An average specialty coffee drink sells for $4.26 and has a margin of 83%. One promotion is providing loyalty cards to her regular customers that would give them one free specialty coffee drink after 10 regular purchases. Alicia estimates that this will increase the frequency of their purchases by 14%. Currently, her customers average buying 2 specialty drinks per week. The second promotion is targeted at new customers. She would offer a free specialty drink to incoming college freshmen by providing a coupon with their orientation packages. Because of her location near the college, she expects that 310 students will come to Cool Beans for a free trial. Of those, she anticipates that 16% will become regular customers who will…
Howard Weiss, Inc., is considering building a sensitive new radiation scanning device. His managers believe that there is a probability of 0.40 that the ATR Co. will come out with a competitive product. If Weiss adds an assembly line for the product and ATR Co. does not follow with a competitive product, Weiss's expected profit is $40,000; if Weiss adds an assembly line and ATR follows suit, Weiss still expects $20,000 profit. If Weiss adds a new plant addition and ATR does not produce a competitive product, Weiss expects a profit of $600,000; if ATR does compete for this market, Weiss expects a loss of $100,000. a) Expected value for the Add Assembly Line option = $ (enter your answer as a whole number).
Read the scenario and then, using the table (if you prefer) , tell us the pros and cons for each of the options (A,B,&C) from both the customer and salesperson's perspective while considering the circumstances. Pros - Customer & Salesperson Perspective Cons - Customer & Salesperson Perspective option A Customer: Salesperson: Customer: Salesperson: Option B Customer: Salesperson: Customer: Salesperson: Option C Customer: Salesperson: Customer: Salesperson:
A company owns a 5-year-old turret lathe that has a book value of $23,000. The present market value for the lathe is $18,000. The expected decline in market value is $1,700/year to a minimum market value of $4,080; maintenance plus operating costs for the lathe equal $4,470/year.A new turret lathe can be purchased for $46,000 and will have an expected life of 8 years. The market value for the turret lathe is expected to equal $46,000(0.70)k at the end of year k. Annual maintenance and operating cost is expected to equal $1,900. Based on a 12% MARR, should the old lathe be replaced now? Use an equivalent uniform annual cost comparison, a planning horizon of 7 years, and the cash flow approach.EUAC for keeping old turret lathe: $EUAC for replacing turret lathe: $
Cool Beans is a locally owned coffeeshop that competes with two large coffee chains, PlanetEuro and Frothies. Alicia, the owner, is considering two different marketing promotions and thinks that CLV analysis will help her decide the best course of action. An average specialty coffee drink sells for $4 and has a margin of 66%. One promotion is providing loyalty cards to her regular customers that would give them one free specialty coffee drink after 10 regular purchases. Alicia estimates that this will increase the frequency of their purchases by 16%. Currently, her customers average buying 2 specialty drinks per week.The second promotion is targeted at new customers. She would offer a free specialty drink to incoming college freshmen by providing a coupon with their orientation packages. Because of her location near the college, she expects that 330 students will come to Cool Beans for a free trial. Of those, she anticipates that 13% will become regular customers who will purchase at…
Three methods can be used for producing heat sensors for high-temperature furnaces. Method A will have a fixed cost of $140,000 per year and a production cost of $62 per part. Method B will have a fixed cost of $210,000 per year and a production cost of $28 per part. Method C will require the purchase of equipment costing $500,000. It will have a life of five years and a 25% of first cost salvage value. The production cost will be $53 per part. At an interest rate of 10% per year, determine the breakeven annual production rate between the two lowest cost methods.

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