You are hired as a consultant for Cool Zone Inc. The company currently has a 1-year contract for the production of 200,000 fuse-plugs for a new state of the art off-road vehicle. With an increasing demand for these vehicles, The owner however, hope that the contract will be extended which will result in increased volume next year. Cool Zone has developed cost for 3 alternatives namely: General-Purpose Equipment (GPE), Flexible manufacturing System (FMS) and expensive but market dominant machine (DM). The cost associated with labour, raw materials and equipment per unit produced is as follows: GPE is $15, while DM and FMS have an associated cost of S13 and $14 respectively. The cost associated with FMS is $200,000, GPE $ 100,000 and DM $500,000 respectively. Regardless of the decision made, the company has to produce a total of 200,000 fuse plugs. b) Using the data, determine the total cost and economical volume for each process. Please provide clear workin and diagrams to explain your answer.

You are hired as a consultant for Cool Zone Inc. The company currently has a 1-year contract for the production of 200,000 fuse-plugs for a new state of the art off-road vehicle. With an increasing demand for these vehicles, The owner however, hope that the contract will be extended which will result in increased volume next year. Cool Zone has developed cost for 3 alternatives namely: General-Purpose Equipment (GPE), Flexible manufacturing System (FMS) and expensive but market dominant machine (DM). The cost associated with labour, raw materials and equipment per unit produced is as follows: GPE is $15, while DM and FMS have an associated cost of S13 and $14 respectively. The cost associated with FMS is $200,000, GPE $ 100,000 and DM $500,000 respectively. Regardless of the decision made, the company has to produce a total of 200,000 fuse plugs. b) Using the data, determine the total cost and economical volume for each process. Please provide clear workin and diagrams to explain your answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Owen conner works part time packaging software for a local distribution company in indiana. The annual fixed cost is $15,000 for this process, direct labor is $4.00 per package, and material is $5.00 per package. The selling price will be $15.00 per package. How much revenue do we need to take in before breaking even? What is the break even point in units?
The total cost a power plant ($/megawatts) to produce electricity is Y=12+1.3X+0.24 X2 , where X is in megawatts. The estimated selling price of electricity is (16-0.23X) per megawatts. Find the value of X that maximizes profit. Group of answer choices Less than 10 megawatts Between 10-12 megawatts Between 12-14 megawatts More than 14 megawatts Dont
A marginal cost fiction C'(q) is given in the figure below. If the fixed costs are $10,000, estimate: a) the total cost to produce 20 units (use left and right hand sums) b) the additional cost if the company increased production from 20 to 40 units
Determine the minimum-cost trade-off between the MTBF and the MTTR for a system requiring 0.98 availability. The MTTR must be between 10 and 28 hr, and the MTBF must be at least 1200 hr. Consider the cost functions as: a. C(x) = 0.0002x2 ; C(y) = 12500/y b. C(x) = 2x; C(y) = 2000-y 2.
Fill in the Blanks Type your answers in all of the blanks and submit According to one estimate, the parts for a Segway Human Transporter - which has five gyroscopes, two tilt sensors, dual redundant motors, 10 microprocessors, and can travel up to 12.5 mph - cost at least $1,500 (Eric A. Taub, "Segway Transporter Slow to Catch On," San Francisco Chronicle, August 11, 2003: E4). Suppose that Segway's marginal cost is $1800, and the price of a Segway is $4000 (b.) What is the elasticity of demand? The price elasticity of demand is two decimal places, include the minus (-) sign if necessary) Type your answer here 0 (round your answer to Please type your answer to submit
A manufacturing company needs to know whether to produce components for a Bird Feeder in-house or buy the components from a fabricator. To make the components in-house, the company needs to buy an injection molding machine, which costs $9,000. The company expects to produce 10,000 units per year. The following estimates have been made: Fixed cost per year Variable cost per part Make $9,000 $6.45 Buy. $0 $7.20 a. What is the break-even point? b. If the number of units produced is 10,000, which option is cheaper: Make or Buy? Explain why. b. If the number of units produced is increased to 12,500, which option is cheaper: Make or Buy? Explain why.
Mirtha owns an online jewelry store that specializes in earrings. In March, she sells 50 pairs of earrings priced at $15. The cost of materials to create the 50 pairs of earrings was $100. The website she uses to sell her wares costs her $10 a month, and she is also charged 4% on each sale by the company that processes debit/credit card purchases. Which of the following best represents Mirth’s total cost? Group of answer choices A)The $750 Mirtha earned from earring sales minus the materials ($100), online website charge ($10), and payment processing charge (4%) B)The sum of the materials ($100), website charge ($10), and 4% payment processing charge (4%) C)The cost of all the materials used to create the earrings, $100 D)The costs of materials minus the costs it takes to run her business through the online store, in this case the $10 website charges and the 4% payment processing charge
A study of 86 savings and loan associations in six northwestern states yielded the following cost function. C� = 3.69 - 0.007999Q� + 0.000005359Q2�2 + 25.0X1�1 (3.69) (3.08) (3.42) (3.50) where C� = average operating expense ratio, expressed as a percentage and defined as total operating expense ($ million) divided by total assets ($ million) times 100 percent. Q� = output; measured by total assets ($ million) X1�1 = ratio of the number of branches to total assets ($ million) Note: The number in parentheses below each coefficient is its respective t-statistic. Holding constant the effects of bank branching (X1�1), what is the level of total assets that minimizes the average operating expense ratio? $746.31 million $1,562.70 million $1,492.63 million $461.31 million What is the average operating expense ratio for a savings and loan association with the level of total assets determined in the previous part and 1 branch?…
Sally Statistics is implementing a system of statistical process control (SPC) charts in her factory in an effort to reduce the overall cost of scrapped product. The current cost of scrap is $X per month. If a 75% learning curve is expected in the use of the SPC charts to reduce the cost of scrap, what would the percentage reduction in monthly scrap cost be after the charts have been used for 6 months? (Hint: Model each month as a unit of production.)
An architect-engineering firm is planning a parking lot to accomodate 400 vehicles. Each parking space will be 8.5 feet x 15 feet. It has been estimated that the space required for aisles will be 70 percentage of the space required for parking. A local paving company charges 8$ per square foot for paving and a flat fee of $10,600 for marking and painting the individual parking spaces. Based on this information, what is the estimated cost of paving and marking this parking lot? The estimated cost of paving and marking the parking lot is: $ ?
Find the Total Cost function as a function of q, c, d. A. w and r; and graph it in relationship to q in excel The idea is to solve the following input minimization problem ina general manner: minTC(K, L ) = wL+ rKs. t. q = AK^CL^d Make sure to set - up your spreadsheet by identifying the optimization problem, the endogenous variables, the exogenous variables and the constraint. Make sure also to show a cell that computes TRS and another that computes -w/r.
Heinrich is a manufacturing engineer with the Miller Company. He has determined the costs of producing a new product to be as follows: Equipment cost: $288,000/year Equipment salvage value at EOY5 = $41,000 Variable cost per unit of production: $14.55 Overhead cost per year: $48,300 If the Miller Company uses a 5-year planning horizon and the product can be sold for a unit price of $39.75, how many units must be produced and sold each year to break even?