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Operations Management
Kim Epson operates a full-service car wash, which operates from 8 A.M. to 8 P.M. seven days a week. The car wash has two stations: an automatic washing and drying station that can handle 30 cars per hour and an interior cleaning station that can handle 210 cars per day. Based on a recent year-end review of operations, Kim estimates that future demand for the interior cleaning station for the seven days of the week, expressed in the average number of cars per day, would be as follows: Kim should not Day Cars should Mon. 160 Tues. 180 Wed. 150 Thurs. 140 Fri. 270 By installing additional equipment (at a cost of $60,000) Kim can increase the capacity of the interior cleaning to 300 cars per day. Each car wash generates a pretax contribution of $3.00. Should Kim install the additional equipment if she expects a pretax payback period of three years or less? install the additional equipment because the payback period is years. (Enter your response rounded to two decimal places.) Sat. 260 O Sun. 260

Kim Epson operates a full-service car wash, which operates from 8 A.M. to 8 P.M. seven days a week. The car wash has two stations: an automatic washing and drying station that can handle 30 cars per hour and an interior cleaning station that can handle 210 cars per day. Based on a recent year-end review of operations, Kim estimates that future demand for the interior cleaning station for the seven days of the week, expressed in the average number of cars per day, would be as follows: Kim should not Day Cars should Mon. 160 Tues. 180 Wed. 150 Thurs. 140 Fri. 270 By installing additional equipment (at a cost of $60,000) Kim can increase the capacity of the interior cleaning to 300 cars per day. Each car wash generates a pretax contribution of $3.00. Should Kim install the additional equipment if she expects a pretax payback period of three years or less? install the additional equipment because the payback period is years. (Enter your response rounded to two decimal places.) Sat. 260 O Sun. 260

Practical Management Science
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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K Kim Epson operates a full-service car wash, which operates from 8 A.M. to 8 P.M. seven days a week. The car wash has two stations: an automatic washing and drying station that can handle 30 cars per hour and an interior cleaning station that can handle 210 cars per day. Based on a recent year-end review of operations, Kim estimates that future demand for the interior cleaning station for the seven days of the week, expressed in the average number of cars per day, would be as follows: Kim should not Day Cars should Mon. 160 Tues. 180 Wed. 150 Thurs. 140 Fri. 270 By installing additional equipment (at a cost of $60,000) Kim can increase the capacity of the interior cleaning to 300 cars per day. Each car wash generates a pretax contribution of $3.00. Should Kim install the additional equipment if she expects a pretax payback period of three years or less? install the additional equipment because the payback period is years. (Enter your response rounded to two decimal places.) Sat. 260 Sun. 260
Transcribed Image Text:K Kim Epson operates a full-service car wash, which operates from 8 A.M. to 8 P.M. seven days a week. The car wash has two stations: an automatic washing and drying station that can handle 30 cars per hour and an interior cleaning station that can handle 210 cars per day. Based on a recent year-end review of operations, Kim estimates that future demand for the interior cleaning station for the seven days of the week, expressed in the average number of cars per day, would be as follows: Kim should not Day Cars should Mon. 160 Tues. 180 Wed. 150 Thurs. 140 Fri. 270 By installing additional equipment (at a cost of $60,000) Kim can increase the capacity of the interior cleaning to 300 cars per day. Each car wash generates a pretax contribution of $3.00. Should Kim install the additional equipment if she expects a pretax payback period of three years or less? install the additional equipment because the payback period is years. (Enter your response rounded to two decimal places.) Sat. 260 Sun. 260
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Step 1

Operating hours per day = 12 hours (from 8AM to 8PM)Capacity of automatic washing and drying station = 30×12 = 360 cars per dayThe current capacity or min actual demand = 210 cars per dayPretax contribution = $3

 

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