OPERATIONS MANAGEMENT (LL) W/CONNECT
14th Edition
ISBN: 9781265502942
Author: Stevenson
Publisher: MCG CUSTOM
expand_more
expand_more
format_list_bulleted
Question
Chapter 5, Problem 18P
Summary Introduction
To determine: The payback time in years.
Introduction: Payback time is the extent of the time in which the initial cost would be recovered. It helps to determine whether to undertake the project or not.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A new piece of equipment will cost $12,000 and will result in a reduced operation cost of $1,500 per year. What will the payback time be in years?
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 evaluation
Lulu’s Dancewear operates a garment manufacturing business that employs 35 operators who work 7 hours a day (breaks already factored), 5 days a week. The plant has an 90% efficiency factor. A customer brought in an order for 5,800 units of a Style C that has a SAM of 20 min. How many units of style C are they producing in in a day?
Round your answer to whole numbers but do not round until you get to the final answer.
Group of answer choices
672
735
655
661
Chapter 5 Solutions
OPERATIONS MANAGEMENT (LL) W/CONNECT
Ch. 5.8 - Explain the meaning of the phrase Hours versus...Ch. 5.8 - Prob. 1.2RQCh. 5.8 - Prob. 1.3RQCh. 5.8 - Prob. 1.4RQCh. 5.8 - Prob. 1.5RQCh. 5.S - Prob. 1DRQCh. 5.S - Prob. 2DRQCh. 5.S - Explain the term bounded rationality.Ch. 5.S - Prob. 4DRQCh. 5.S - Prob. 5DRQ
Ch. 5.S - What information is contained in a payoff table?Ch. 5.S - Prob. 7DRQCh. 5.S - Prob. 8DRQCh. 5.S - Under what circumstances is expected monetary...Ch. 5.S - Explain or define each of these terms: a. Laplace...Ch. 5.S - Prob. 11DRQCh. 5.S - Prob. 12DRQCh. 5.S - Prob. 13DRQCh. 5.S - Prob. 1PCh. 5.S - Refer to problem1. Suppose after a certain amount...Ch. 5.S - Refer to Problems 1 and 2 Construct a graph that...Ch. 5.S - Prob. 4PCh. 5.S - Prob. 5PCh. 5.S - The lease of Theme Park, Inc., is about to expire....Ch. 5.S - Prob. 7PCh. 5.S - Prob. 8PCh. 5.S - Prob. 9PCh. 5.S - A manager must decide how many machines of a...Ch. 5.S - Prob. 11PCh. 5.S - Prob. 12PCh. 5.S - Prob. 13PCh. 5.S - Prob. 14PCh. 5.S - Give this payoff table: a. Determine the range of...Ch. 5.S - Prob. 16PCh. 5.S - Repeat all parts of problem 16, assuming the value...Ch. 5 - Prob. 1DRQCh. 5 - Prob. 2DRQCh. 5 - How do long-term and short-term capacity...Ch. 5 - Give an example of a good and a service that...Ch. 5 - Give some example of building flexibility into...Ch. 5 - Why is it important to adopt a big-picture...Ch. 5 - What is meant by capacity in chunks, and why is...Ch. 5 - Prob. 8DRQCh. 5 - How can a systems approach to capacity planning be...Ch. 5 - Prob. 10DRQCh. 5 - Why is it important to match process capabilities...Ch. 5 - Briefly discuss how uncertainty affects capacity...Ch. 5 - Prob. 13DRQCh. 5 - Prob. 14DRQCh. 5 - Prob. 15DRQCh. 5 - Prob. 16DRQCh. 5 - What is the benefit to a business organization of...Ch. 5 - Prob. 1TSCh. 5 - Prob. 2TSCh. 5 - Prob. 3TSCh. 5 - Prob. 1CTECh. 5 - Prob. 2CTECh. 5 - Identify four potential unethical actions or...Ch. 5 - Any increase in efficiency also increases...Ch. 5 - Prob. 1PCh. 5 - In a job shop, effective capacity is only 50...Ch. 5 - A producer of pottery is considering the addition...Ch. 5 - A small firm intends to increase the capacity of a...Ch. 5 - A producer of felt-tip pens has received a...Ch. 5 - A real estate agent is considering changing her...Ch. 5 - A firm plans to begin production of a new small...Ch. 5 - A manager is trying to decide whether to purchase...Ch. 5 - A company manufactures a product using two machine...Ch. 5 - A company must decide which type of machine to...Ch. 5 - Prob. 11PCh. 5 - A manager must decide how many machines of a...Ch. 5 - Prob. 13PCh. 5 - The following diagram shows a four-step process...Ch. 5 - Prob. 15PCh. 5 - Prob. 16PCh. 5 - Prob. 17PCh. 5 - Prob. 18PCh. 5 - A new machine will cost 18,000, butt result it...Ch. 5 - Remodelling an office will cost 25,000 and will...Ch. 5 - Prob. 1CQCh. 5 - Prob. 2CQCh. 5 - Prob. 3CQ
Knowledge Booster
Similar questions
- A new machine will cost $18,000, but result it will in savings of $2,400 per year. What will the payback time be in years?arrow_forwardAce Shoe Company sells heel replacement kits for men's shoes. It has fixed costs of $9 million and unit variable costs of $5 per pair. Ace is considering a switch from manual labor to an automated process. New equipment would cost an additional $4 million per year while lowering variable costs by $3 per shoe repair kit. How many kits would Ace have to sell at $17 per pair to make $2 million in profits in the next year with the automated process?arrow_forward"I'm not sure we should lay out $265,000 for that automated welding machine," said Jim Alder, president of the Superior Equipment Company. "That's a lot of money, and it would cost us $78,000 for software and installation, and another $40,800 per year just to maintain the thing. In addition, the manufacturer admits it would cost $41,000 more at the end of three years to replace worn-out parts." "I admit it's a lot of money," said Franci Rogers, the controller. “But you know the turnover problem we’ve had with the welding crew. This machine would replace six welders at a cost savings of $108,000 per year. And we would save another $6,900 per year in reduced material waste. When you figure that the automated welder would last for six years, I'm sure the return would be greater than our 19% required rate of return." "I'm still not convinced," countered Mr. Alder. "We can only get $14,000 scrap value out of our old welding equipment if we sell it now, and in six years the new machine will…arrow_forward
- Your small toy manufacturing facility has the following information: Fixed costs $39,000 Material cost per toy $0.888 Electricity cost per toy $0.044 Labor cost per toy $0.207 Management demands that we have $9,000 in profit if we sell 45,000 toys. What must the selling price be to achieve this? (Enter three decimal places)arrow_forwardSamoset 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…arrow_forwardPrepare a memo to the Board of Directors that proposes cost containment projects that reduce facility costs as well as improve quality.arrow_forward
- Your company is implementing a new production line for making solar panels. The company has two main alternatives in setting up the production line: either use highly automated equipment or use general-purpose equipment. Cost information for these two options is as follows: ALTERNATIVE FIXED COST VARIABLE COST Automated Equipment General-Purpose Equipment $900,000 per year $150,000 per year $50 per unit $100 per unit For what range of output is the Automated Equipment the low-cost option? O A. 15,000 or more units per year B. 0-25,000 units per year C. 0-15,000 or more units per year D. 0-10,000 units per yeararrow_forwardSamoset 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…arrow_forwardWhat role does scalability play in performance measurements, and why is it significant for business growth?arrow_forward
- How low must the variable cost per unit be to break even, based on current prices and sales forecasts?arrow_forwardA). A product is currently made in a process-focused shop, where fixed costs are $9,000 per year and variable cost is $50 per unit. The firm sells the product for $150 per unit. What is the break-even point for this operation? What is the profit (or loss) on a demand of 200 units per year? B). A newly opened bed-and-breakfast projects the following: Monthly fixed costs $10,000 Variable cost per occupied room per night $40 Revenue per occupied room per night $165 How many rooms would have to be occupied per month in order to break even?arrow_forwardYour company is implementing a new production line for making solar panels. The company has two main alternatives in setting up the production line: either use highly automated equipment or use general-purpose equipment. Cost information for these two options is as follows: ALTERNATIVE FIXED COST VARIABLE COST Automated Equipment General-Purpose Equipment $900,000 per year $150,000 рer year $50 per unit $100 per unit At an annual requirement of 20,000 units, what does the company save per year by selecting the lower-cost option? A. $150,000 В. $400,000 С. $350,000 D. $250,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Operations ManagementOperations ManagementISBN:9781259667473Author:William J StevensonPublisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...Operations ManagementISBN:9781259666100Author:F. Robert Jacobs, Richard B ChasePublisher:McGraw-Hill Education
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...Operations ManagementISBN:9781478623069Author:Steven Nahmias, Tava Lennon OlsenPublisher:Waveland Press, Inc.
Practical Management Science
Operations Management
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:Cengage,
Operations Management
Operations Management
ISBN:9781259667473
Author:William J Stevenson
Publisher:McGraw-Hill Education
Operations and Supply Chain Management (Mcgraw-hi...
Operations Management
ISBN:9781259666100
Author:F. Robert Jacobs, Richard B Chase
Publisher:McGraw-Hill Education
Purchasing and Supply Chain Management
Operations Management
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Cengage Learning
Production and Operations Analysis, Seventh Editi...
Operations Management
ISBN:9781478623069
Author:Steven Nahmias, Tava Lennon Olsen
Publisher:Waveland Press, Inc.