Operations Management
13th Edition
ISBN: 9781259667473
Author: William J Stevenson
Publisher: McGraw-Hill Education
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Chapter 1, Problem 5CQ
Summary Introduction
Case summary:
Person H and 400 co-workers were terminated from a company as a result of downsizing. She tried for another job for almost 8 months. However, she could not able to find a job. Hence, she thought making money by mowing the lawns of her neighbors. After so many rejections from the job search, she decided to make it as her business.
In the initial stages, it was little slow. However, after few months, most of the neighbors preferred Person H to mow their lawns over professional lawn care services. Other services performed by Person H are shrubbery, trimming, fertilizing lawns, and weeding gardens.
To determine: The possible trade-offs associated with the given scenario.
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Which of the following scenarios accurately reflects the meaning of the profit leverage effect?
Group of answer choices
With a 7.6% profit margin, decreasing your cost of goods sold (COGS) by $10,000 increases your pre-tax profits by $10,000, but increasing your sales by $10,000 only increases your pre-tax profits by $760.
When operating with a 7.6% profit margin, your cost of goods sold will be $10,000 as long as your sales exceed $10,000.
With a 7.6% profit margin, every additional $10,000 in sales increases your pre-tax profits by $10,000, while every $10,000 saved in purchasing increases your pre-tax profits by just $760.
If your profit margin is 7.6%, every $10,000 saved in purchasing lowers your COGS sold by $760.
You wanted to join a booth fair, and you are aiming to get a profit that is twice as your capital. Your starting capital is $15,000.00. Make a financial plan for the booth that you will set up and the product that you will sell. You may use the sample plan below:
FINANCIAL PLAN
Product:
Description of product:
Goal:
Capital: 15,000.00
Fixed Cost (Labor, Machineries, Expenses for the booth etc):
Variable Cost (Materials, Ingredients, etc):
Profit function:
Prove that profit function will yield an amount that is twice the capital
Jon Snow has invented a new and improved space heater unlike anything in the market. He has a prototype but after unsuccessfully pitching his idea to a large manufacturer group, Wildlings Worldwide, he has decided he will form his own manufacturing business. One of his concerns is raising enough capital so he can meet the high demand for his space heaters by the time winter comes. what are the risks? What business entity would you form and Why?
Chapter 1 Solutions
Operations Management
Ch. 1.6 - Prob. 1RQCh. 1.6 - Prob. 2RQCh. 1.6 - Prob. 3RQCh. 1.9 - There is a huge demand in the United States and...Ch. 1.10 - Prob. 1OTQCh. 1.10 - Prob. 2OTQCh. 1.10 - Prob. 3OTQCh. 1 - Prob. 1DRQCh. 1 - Prob. 2DRQCh. 1 - Prob. 3DRQ
Ch. 1 - List five important differences between goods...Ch. 1 - Briefly discuss each of these terms related to the...Ch. 1 - Prob. 6DRQCh. 1 - Prob. 7DRQCh. 1 - Why is the degree of customization an important...Ch. 1 - List the trade-offs you would consider for each of...Ch. 1 - Prob. 10DRQCh. 1 - Why might some workers prefer not to work in a...Ch. 1 - Prob. 12DRQCh. 1 - Prob. 13DRQCh. 1 - Prob. 14DRQCh. 1 - Prob. 15DRQCh. 1 - Prob. 16DRQCh. 1 - Prob. 17DRQCh. 1 - What are trade-offs? Why it careful consideration...Ch. 1 - Prob. 2TSCh. 1 - Prob. 3TSCh. 1 - Prob. 1CTECh. 1 - Prob. 2CTECh. 1 - Prob. 3CTECh. 1 - Prob. 4CTECh. 1 - Prob. 1CQCh. 1 - Prob. 2CQCh. 1 - What are some of the trade-offs that Hazel...Ch. 1 - The town is considering an ordinance that would...Ch. 1 - Prob. 5CQCh. 1 - Prob. 6CQCh. 1 - Prob. 7CQ
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