Operations Management (Comp. Instructor's Edition)
Operations Management (Comp. Instructor's Edition)
13th Edition
ISBN: 9781259948237
Author: Stevenson
Publisher: MCG
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Chapter 14, Problem 10DRQ
Summary Introduction

To determine: The benefits and risks of small lot sizes.

Introduction: Lot size refers to the amount of a product requested for conveyance on a particular date or made in a single manufacturing run. Lot size fundamentally refers to the aggregate amount of an item requested for assembling. In budgetary markets, lot estimate is a measure or amount increase to reasonable or précised by the gathering which is putting forth to purchase or offer it.

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Each machine costs $3 Million. Building the room with all its attendant safety protection and other ancillary costs increases the spending by an additional $2.0 million dollars per MRI suite. Each machine can perform 2000 scans per year. Each reading of an MRI scan by a radiologist, along with other per-scan-related costs, is $500 per scan. The machine will last five years.  Don’t worry about discount rates for this problem Graph the total costs over 5 years as a function of sales for 0-3000 patients annually. Hint: you may need to add a second MRI at some point. Suppose that you want to make a profit of $500 per scan at a target volume of 1000 patients per year, and you purchase only one machine.  Superimpose the total revenue curve on top of the total cost curve in (1).
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