Operations Management: Processes and Supply Chains, Student Value Edition Plus MyLab Operations Management with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134855424
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
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Textbook Question
Chapter 4, Problem 23P
Referring to Problem 7, the operations manager at Macon Controls believes that pessimistic demand has a probability of 20 percent, expected demand has a probability of 50 percent, and optimistic demand has a probability of 30 percent. Currently, new machines must be purchased at a cost of $500,000 a piece, the price charged for each control unit is $110, and the variable cost of production is $50 per unit. (Hint: since the price and variable cost for each control unit are the same, the profit maximizing product mix will be the same as the mix that maximizes the total number of units produced.)
- Draw a decision tree for this problem.
- How many machines should the company purchase, and what is the expected payoff?
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Southeastern Airlines's daily flight from Atlanta to Charlotte uses a Boeing 737, with all-coach seating for 120 people. In the past, the airline has priced every seat at $142 for the one-way flight. An average of 79 passengers are on each flight. The variable cost of a filled seat is $26. Aysajan Eziz, the new operations manager,
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Southeastern Airlines's daily flight from Atlanta to Charlotte uses a Boeing 737, with all-coach seating for 120 people. In the past, the airline has priced every seat at $136 for the one-way flight. An average of 81 passengers are on each flight. The variable cost of a filled seat is $23. Aysajan Eziz, the new operations manager, has decided to try a yield revenue approach, with seats priced at $82 for early bookings and at $195 or bookings within 1 week of the flight. He estimates that the airline will sell 66 seats at the lower price and 33 at the higher price. Variable cost will not change.
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2. Total $ contribution in the two price points approach is ? (enter your response as a whole number).
3.Which approach is preferable to Mr. Eziz?
A.Proposed model−two price points
OR
B. Current Model - Single price
The bus of company A has planned their capacity in terms of ‘bus-days’. Forecasts show expected annual demands for the next year to average 400,000 full-day passengers and 840,000 half-day passengers. The company has 61 buses, each with an effective capacity of 40 passengers a day for 300 days a year. Breakdowns and other unexpected problems reduce efficiency to 90%. They employ 86 drivers who work an average of 220 days a year, but illness and other absences reduce their efficiency to 85%. If there is a shortage of buses the company can buy extra ones for $110,000 or hire them for $100 a day. If there is a shortage of drivers they can recruit extra ones at a cost of $20,000 a year, or hire them from an agency for $110 a day.
How can the company approach its tactical planning? Please recommend company A the best plan and explain in detail the reasons for the selection
Chapter 4 Solutions
Operations Management: Processes and Supply Chains, Student Value Edition Plus MyLab Operations Management with Pearson eText -- Access Card Package (12th Edition)
Ch. 4 - Prob. 1DQCh. 4 - Prob. 2DQCh. 4 - The Dahlia Medical Center has 30 labor rooms, 15...Ch. 4 - A process currently services an average of 50...Ch. 4 - An airline company must plan its fleet capacity...Ch. 4 - Food Goblin Supermarkets use both cashiers and...Ch. 4 - Returning to Problem 4, under both assumption of...Ch. 4 - Purple Swift manufactures birdhouses in lots of...Ch. 4 - Macon Controls produces three different types of...Ch. 4 - Up, Up, and Away is a producer of kites and wind...
Ch. 4 - Tuff-Rider, Inc. manufactures touring bikes and...Ch. 4 - Arabelle is considering expanding the floor area...Ch. 4 - The Astro World amusement park has the opportunity...Ch. 4 - Kim Epson operates a full-service car wash, which...Ch. 4 - MKM International is seeking to purchase a new CNC...Ch. 4 - Prob. 17PCh. 4 - Prob. 18PCh. 4 - Prob. 19PCh. 4 - Dawson Electronics is a manufacturer of high-tech...Ch. 4 - A manager is trying to decide whether to buy one...Ch. 4 - Acme Steel Fabricators experienced booming...Ch. 4 - Referring to Problem 7, the operations manager at...Ch. 4 - Darren Mack owns the Gas n’ Go convenience store...Ch. 4 - Prob. 25PCh. 4 - Prob. 1VCCh. 4 - Prob. 2VCCh. 4 - How does Southwest Airlines know they are...Ch. 4 - Prob. 4VCCh. 4 - Prob. 1CCh. 4 - Prob. 2CCh. 4 - Prob. 3C
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