OPERATIONS MANAGEMENT IN THE SUPPLY CHAIN: DECISIONS & CASES (Mcgraw-hill Series Operations and Decision Sciences)
7th Edition
ISBN: 9780077835439
Author: Roger G Schroeder, M. Johnny Rungtusanatham, Susan Meyer Goldstein
Publisher: McGraw-Hill Education
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Chapter 4, Problem 5DQ
Compare the expensive restaurant, fast-food restaurant, and cafeteria in terms of process characteristics, such as capital, product type, labor, planning, and
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Samoset Fans, Inc. manufacturers its fan blades in-house. The owner, Betty Dice, doesn't outsource any fan parts except fan motors — all other fans parts are made in-house. Their current process and its equipment are getting old. Maintenance and repair costs are increasing at eleven percent per year. She and her company team are evaluating two new processes. The first process has an annual fixed cost of $760,000 and a variable cost of $19 per fan blade. The second process is more automated and requires an annual fixed cost of $1,100,000 and a variable cost of $11 per fan blade. The internal transfer cost of a fan blade is $24, and this helps the firm determine the total manufactured cost of a completed fan. Use the Excel template Break-Even in MindTap to answer the following questions:
What is the break-even quantity between these two processes? Round your answer to the nearest whole number.
fan blades
If predicted demand for next year is 160,000 blades, what process do you…
Samoset Fans, Inc. manufacturers its fan blades in-house. The owner, Betty Dice, doesn't outsource any fan parts except fan motors — all other fans parts are made in-house. Their current process and its equipment are getting old. Maintenance and repair costs are increasing at seven percent per year. She and her company team are evaluating two new processes. The first process has an annual fixed cost of $730,000 and a variable cost of $12 per fan blade. The second process is more automated and requires an annual fixed cost of $1,050,000 and a variable cost of $10 per fan blade. The internal transfer cost of a fan blade is $22, and this helps the firm determine the total manufactured cost of a completed fan. Use the Excel template Break-Even in MindTap to answer the following questions:
What is the break-even quantity between these two processes? Round your answer to the nearest whole number.
fan blades
If predicted demand for next year is 110,000 blades, what process do you…
The Big Black Bird Company (BBBC) has a large order for special plastic-lined military uniforms to be used in an urgent military operation. Working the normal two shifts of 40 hours each per week, the BBBC production process usually produces 2,500 uniforms per week at a standard cost of $120 each. Seventy employees work the first shift and 30 employees work the second. The contract price is $200 per uniform. Because of the urgent need, BBBC is authorized to use around-the-clock production, 6 days per week. When each of the two shifts works 72 hours per week, production increases to 4,000 uniforms per week but at a cost of $144 each.a. Did the multifactor productivity ratio increase, decrease, or remain the same? If it changed, by what percentage did t change?b. Did the labor productivity ratio increase, decrease, or remain the same? If it changed, by what percentage did it change?c. Did weekly profits increase, decrease, or remain the same?
Chapter 4 Solutions
OPERATIONS MANAGEMENT IN THE SUPPLY CHAIN: DECISIONS & CASES (Mcgraw-hill Series Operations and Decision Sciences)
Ch. 4 - Prob. 1DQCh. 4 - Why are assembly-line processes usually so much...Ch. 4 - The rate of productivity improvement in the...Ch. 4 - Several industriesincluding those that produce...Ch. 4 - Compare the expensive restaurant, fast-food...Ch. 4 - A company is in the business of making souvenir...Ch. 4 - Prob. 7DQCh. 4 - Suppose that a firm is considering moving from a...Ch. 4 - Prob. 9DQCh. 4 - Prob. 10DQ
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- What is it about service processes that make their design and operation so different from manufacturing processes?arrow_forwardThe Andrews family is in the process of hiring a five-star chef who can cook a variety of food to meet customers’ tastes and wants (top quality). In addition, the restaurant is designed to provide complete privacy to customers. Therefore, tables ought to be separated by no less than 5 feet. Using Chapter 2 and the assigned videos as your theoretical foundations, please answer the following question. What production process should the restaurant choose? Explain your answer. In contrast to the Andrews family restaurant, the Sweet family restaurant sells burgers, burritos, and hotdogs. The restaurant relies on high school students to cook food, and customers cannot customize their food choices. The Sweet family restaurant sells 2000 burgers per restaurant each day. The average costs of burgers, burritos, and hot dogs are $2, $3, and $0.50, respectively. Using Chapters 1 and 2 as your theoretical foundations, please answer the following question: What are the Sweet family…arrow_forwardWhat are the most significant distinctions between production processes and service systems in terms of their design and management?arrow_forward
- How low must the variable cost per unit be to break even, based on current prices and sales forecasts?arrow_forwardA manager is trying to decide whether to purchase (buy) a certain part or to have it produced internally (make). Internal production could use either of two processes. One would entail a variable cost of USD19.00 per unit and an annual fixed cost of USD 220,000.00, the other would entail a variable cost of USD15 per pnit and an annual fixed cost of USD 245,000.00. There are three vendors who are willing to provide the part. Vendor 1 has a price of USD 21.00 per unit for any volume up to 32,000 units. Vendor 2 hasa price of USD 24.00 per unit for a demand of 1,000 units or less and USD18.00 per unit for larger quantities. Vendor 3 offersa price of USD 23.00 per unit for the first 1,000 units, and USD 19 per unit for additional units. If the manager anticipates an annual volume of 10,000 units,, which alternative would be best from a cost standpoint? For 25,000 units, which alternative would be best? 1. At 10,000 units, is the total cost from vendor 1. 2. At 10,000 units, is the total…arrow_forwardIt costs $50,000 to start a production process. Variable cost is $25 per unit and revenue is $45 per unit. What is the break-even point?arrow_forward
- You are the operations manager for Louisiana Oysters, Inc. The company has designed new "Oyster shucking" knife that is expected to reduce risk of injury to the user. Your firm plans to begin production of these knives soon. Either of two machines, A or B could be used for in-house production. Machine A would have a fixed cost of $6000 and a variable cost of $5 per knife produced, and machine B would have a fixed cost of $9600 but a variable cost of $3 per knife. Each knife is expected to sell for $15. Determine the Range of annual “Volume of Business“[Q], for which each of the two alternative machines would be optimal i.e. best. Hint: Compute various break-even points for your evaluationarrow_forward“How many dozen should I put in the proofer?” asked Elizabeth, the new baker at the Sands Cafeteria. Rami El‐Hussieny was the day shift operations manager, and, unfortunately, he did not know how to answer Elizabeth's question. What she wanted to know was simple enough: How many dozen rolls should be placed in the proofer in anticipation of the night's dinner business? The problem was that the frozen dinner roll dough used at the Sands Cafeteria needed to be proof for at least 2 hours prior to being baked for 15 minutes. If too many rolls were proofed, they would never be needed, but they would still have to be baked and made into bread dressing or even tossed out. If too few dozen were proofed and the night was busier than anticipated, they would run out of “Fresh Baked Rolls” (one of the restaurant's signature items), and Rami knew that the night manager would be really upset. It was a daily guess, and sometimes Rami missed the guess! He wondered if a prebaked roll with a shelf life…arrow_forwardDescribe the importance of the matching process capabilities with product requirements?arrow_forward
- The production system design planning considers input requirements, conversion process and output. After considering the forecast and long-term planning organization should undertake capacity planning. Capacity planning is essential to be determining optimum utilization of resource and plays an important role decision-making process, for example, extension of existing operations, modification to product lines, starting new products, etc. With this regard, Examine different types of capacity measurements available for capacity planning. Provide relevant examples for each measurement.arrow_forwardAs operations manager of Holz Furniture, you must make a decision about adding a line of rustic furniture. In discussing the possibilities with your sales manager, Steve Gilbert, you decide that there will definitely be a market and that your firm should enter that market. However, because rustic furniture has a different finish than your standard offering, you decide you need another process line. There is no doubt in your mind about the decision, and you are sure that you should have a second process. But you do question how large to make it. A large process line is going to cost $400,000; a small process line will cost $300,000. The question, therefore, is the demand for rustic furniture. After extensive discussion with Mr. Gilbert and Rosalita Ferrera of Ferrera Market Research, Inc., you determine that the best estimate you can make is that there is a two-out-of-three chance of high demand resulting in $625,000 profit from sales and a one-out-of-three chance of low demand…arrow_forwardAs operations manager of Holz Furniture, you must make a decision about adding a line of rustic furniture. In discussing the possibilities with your sales manager, Steve Gilbert, you decide that there will definitely be a market and that your firm should enter that market. However, because rustic furniture has a different finish than your standard offering, you decide you need another process line. There is no doubt in your mind about the decision, and you are sure that you should have a second process. But you do question how large to make it. A large process line is going to cost $425,000; a small process line will cost $300,000. The question, therefore, is the demand for rustic furniture. After extensive discussion with Mr. Gilbert and Rosalita Ferrera of Ferrera Market Research, Inc., you determine that the best estimate you can make is that there is a two-out-of-three chance of profit from sales as large as $625,000 and a one-out-of-three chance as low as $350,000. With a large…arrow_forward
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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