Operations Management: Processes and Supply Chains, Student Value Edition Plus MyLab Operations Management with Pearson eText -- Access Card Package (11th Edition)
11th Edition
ISBN: 9780134111056
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
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Textbook Question
Chapter 2, Problem 2P
Two different manufacturing processes are being considered for making a new product. The first process is less capital-intensive, with fixed costs of only $50,000 per year and variable costs of $700 per unit. The second process has fixed costs of $400,000 but has variable costs of only $200 per unit.
- What is the break-even quantity beyond which the second process becomes more attractive than the first?
- If the expected annual sales for the product is 800 units, which process would you choose?
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Students have asked these similar questions
Company Z wants to change its major producť's production
process. Detailed production cost data of four different process
alternatives are given in the table below. The annual demand for
the product is 60.000 units and the selling price is $120 per unit.
Annualized Fixed Cost
Variable Costs (per unit) ($)
Process Type
of Plant & Equipment
Labor
Material
Energy
Mass Customization
$1,400,000
$1,000,000
$1,600,000
$1,960,000
30
18
12
Intermittent
24
26
20
Repetitive
28
15
12
Continuous
25
15
10
According to the given information about the demand, the value of
annual profit using the best alternative process is $
Why do the process capabilities match the requirements of the product?
Why is flexibility in the process desired? What are the two requirements?
Chapter 2 Solutions
Operations Management: Processes and Supply Chains, Student Value Edition Plus MyLab Operations Management with Pearson eText -- Access Card Package (11th Edition)
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Process selection and facility layout; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=wjxS79880MM;License: Standard YouTube License, CC-BY