EBK PRINCIPLES OF OPERATIONS MANAGEMENT
10th Edition
ISBN: 8220102744059
Author: HEIZER
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 7.S, Problem 24P
Summary Introduction
To determine: Whether the company must purchase the new equipment and increase the selling price.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Telephone poles, once installed in a location, remain in useful service until one of a variety of events occur. (a) Name three reasons why a telephone pole might be removed from useful service at a particular location. (b) You are to estimate the total useful life of telephone poles. If the pole is removed from an original location while it is still serviceable, it will be installed elsewhere. Estimate the optimistic life, most likely life, and pessimistic life for telephone poles. What percentage of all telephone poles would you expect to have a total useful life greater than your estimated optimistic life? (c) What is an environmental life cycle assessment (LCA)? How do treated wood, metal, and concrete poles compare?
Statement of the Problem and Solutions
Rollin King and Herb Kelleher started Southwest Airlines in 1971 with this idea: if they could take airline passengers where they want to go, on time, at the lowest possible price, and have a good time while doing it, people would love to fly their airline. The result? No other airline in the industry's history has enjoyed the customer loyalty and extended profitability for which Southwest is now famous. The company now flies more than 3,400 times each day to over 64 destinations across the United States
There's more to the story, however, than making promises and hoping to fulfill them. A large part of Southwest Airlines' success lies in its ability to plan long-term capacity to better match demand, as also improving the utilization of its fleet by turning around an aircraft at the gate faster than its competitors. Capacity at Southwest is measured in seat miles, and even a single minute reduction in aircraft turnaround time system wide means…
Techno Corporation is currently manufacturing an item at vanable costs of $4 per unit. Annual fixed costs of manufacturing this item are $141,000. The current selling price of the item is $10 per unit, and the annual sales volume is 35,000 units
a. Techno can substantially improve the item's quality by installing new equipment at additional annual fixed costs of $55,000 Vanable costs per unit would increase by $1, but, as more of the better-quality product could be sold, the annual volume would increase to 60,000 units. Should Techno buy the new equipment and maintain the current price of the item? Why or why not?
because the profit
from $to $(Enter your responses an integers)
Chapter 7 Solutions
EBK PRINCIPLES OF OPERATIONS MANAGEMENT
Ch. 7.S - Prob. 1DQCh. 7.S - Prob. 2DQCh. 7.S - Prob. 3DQCh. 7.S - Prob. 4DQCh. 7.S - Prob. 5DQCh. 7.S - Distinguish between bottleneck time and throughput...Ch. 7.S - Prob. 7DQCh. 7.S - Prob. 8DQCh. 7.S - Prob. 9DQCh. 7.S - Prob. 10DQ
Ch. 7.S - Prob. 11DQCh. 7.S - Prob. 12DQCh. 7.S - What are the techniques available to operations...Ch. 7.S - Amy Xias plant was designed to produce 7,000...Ch. 7.S - For the post month, the plant in Problem S7.1,...Ch. 7.S - Prob. 3PCh. 7.S - Prob. 4PCh. 7.S - Prob. 5PCh. 7.S - The effective capacity and efficiency for the next...Ch. 7.S - Southeastern Oklahoma State Universitys business...Ch. 7.S - Prob. 8PCh. 7.S - Prob. 9PCh. 7.S - Prob. 10PCh. 7.S - The three-station work cell illustrated in Figure...Ch. 7.S - The three-station work cell at Pullman Mfg., Inc....Ch. 7.S - The Pullman Mfg., Inc., three-station work cell...Ch. 7.S - Prob. 14PCh. 7.S - 10 minutes per unit. Part 2 is simultaneously...Ch. 7.S - Prob. 16PCh. 7.S - Prob. 17PCh. 7.S - Using the data in Problem S7.17: a) What is the...Ch. 7.S - Prob. 19PCh. 7.S - Prob. 20PCh. 7.S - Prob. 21PCh. 7.S - Prob. 22PCh. 7.S - Prob. 23PCh. 7.S - Prob. 24PCh. 7.S - Prob. 25PCh. 7.S - Prob. 26PCh. 7.S - Prob. 27PCh. 7.S - Prob. 32PCh. 7.S - Prob. 33PCh. 7.S - Prob. 34PCh. 7.S - Prob. 35PCh. 7.S - Prob. 36PCh. 7.S - Prob. 37PCh. 7.S - Prob. 38PCh. 7.S - Prob. 39PCh. 7.S - Prob. 1VCCh. 7.S - a capacity expansion plan and a new 11-story...Ch. 7.S - a capacity expansion plan and a new 11-story...Ch. 7 - Ethical Dilemma For the sake of efficiency and...Ch. 7 - Prob. 1DQCh. 7 - Prob. 2DQCh. 7 - Prob. 3DQCh. 7 - Prob. 4DQCh. 7 - Prob. 5DQCh. 7 - Prob. 6DQCh. 7 - Prob. 7DQCh. 7 - Prob. 8DQCh. 7 - Prob. 9DQCh. 7 - Prob. 10DQCh. 7 - Prob. 11DQCh. 7 - Prob. 12DQCh. 7 - Prob. 13DQCh. 7 - Prob. 14DQCh. 7 - Prob. 15DQCh. 7 - Prob. 16DQCh. 7 - Prob. 17DQCh. 7 - Prob. 18DQCh. 7 - Prob. 19DQCh. 7 - Prob. 1PCh. 7 - Usingthedatain Problem 7.1, determinethemost...Ch. 7 - Prob. 3PCh. 7 - Refer to Problem 7.1. If a contract for the second...Ch. 7 - Stan Fawcetts company is considering producing a...Ch. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Metters Cabinets, Inc., needs to choose a...Ch. 7 - Prob. 10PCh. 7 - Nagle Electric. Inc., of Lincoln, Nebraska, must...Ch. 7 - Stapleton Manufacturing intends to increase...Ch. 7 - Prepare a flowchart for one of the following: a)...Ch. 7 - Prepare a process chart for one of the activities...Ch. 7 - Prob. 15PCh. 7 - Prob. 16PCh. 7 - Prob. 17PCh. 7 - Prob. 1CSCh. 7 - Prob. 2CSCh. 7 - Prob. 3CSCh. 7 - Process Strategy at Wheeled Coach Wheeled Coach,...Ch. 7 - Prob. 1.2VCCh. 7 - Prob. 1.3VCCh. 7 - Prob. 1.4VCCh. 7 - Alaska Airlines: 20-Minute Baggage...Ch. 7 - Prob. 2.2VCCh. 7 - Prob. 2.3VCCh. 7 - Prob. 2.4VCCh. 7 - Prob. 2.5VCCh. 7 - Prob. 3.1VCCh. 7 - Prob. 3.2VCCh. 7 - Prob. 3.3VCCh. 7 - Prob. 3.4VC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Similar questions
- Scenario 4 Sharon Gillespie, a new buyer at Visionex, Inc., was reviewing quotations for a tooling contract submitted by four suppliers. She was evaluating the quotes based on price, target quality levels, and delivery lead time promises. As she was working, her manager, Dave Cox, entered her office. He asked how everything was progressing and if she needed any help. She mentioned she was reviewing quotations from suppliers for a tooling contract. Dave asked who the interested suppliers were and if she had made a decision. Sharon indicated that one supplier, Apex, appeared to fit exactly the requirements Visionex had specified in the proposal. Dave told her to keep up the good work. Later that day Dave again visited Sharons office. He stated that he had done some research on the suppliers and felt that another supplier, Micron, appeared to have the best track record with Visionex. He pointed out that Sharons first choice was a new supplier to Visionex and there was some risk involved with that choice. Dave indicated that it would please him greatly if she selected Micron for the contract. The next day Sharon was having lunch with another buyer, Mark Smith. She mentioned the conversation with Dave and said she honestly felt that Apex was the best choice. When Mark asked Sharon who Dave preferred, she answered, Micron. At that point Mark rolled his eyes and shook his head. Sharon asked what the body language was all about. Mark replied, Look, I know youre new but you should know this. I heard last week that Daves brother-in-law is a new part owner of Micron. I was wondering how soon it would be before he started steering business to that company. He is not the straightest character. Sharon was shocked. After a few moments, she announced that her original choice was still the best selection. At that point Mark reminded Sharon that she was replacing a terminated buyer who did not go along with one of Daves previous preferred suppliers. Ethical decisions that affect a buyers ethical perspective usually involve the organizational environment, cultural environment, personal environment, and industry environment. Analyze this scenario using these four variables.arrow_forwardScenario 4 Sharon Gillespie, a new buyer at Visionex, Inc., was reviewing quotations for a tooling contract submitted by four suppliers. She was evaluating the quotes based on price, target quality levels, and delivery lead time promises. As she was working, her manager, Dave Cox, entered her office. He asked how everything was progressing and if she needed any help. She mentioned she was reviewing quotations from suppliers for a tooling contract. Dave asked who the interested suppliers were and if she had made a decision. Sharon indicated that one supplier, Apex, appeared to fit exactly the requirements Visionex had specified in the proposal. Dave told her to keep up the good work. Later that day Dave again visited Sharons office. He stated that he had done some research on the suppliers and felt that another supplier, Micron, appeared to have the best track record with Visionex. He pointed out that Sharons first choice was a new supplier to Visionex and there was some risk involved with that choice. Dave indicated that it would please him greatly if she selected Micron for the contract. The next day Sharon was having lunch with another buyer, Mark Smith. She mentioned the conversation with Dave and said she honestly felt that Apex was the best choice. When Mark asked Sharon who Dave preferred, she answered, Micron. At that point Mark rolled his eyes and shook his head. Sharon asked what the body language was all about. Mark replied, Look, I know youre new but you should know this. I heard last week that Daves brother-in-law is a new part owner of Micron. I was wondering how soon it would be before he started steering business to that company. He is not the straightest character. Sharon was shocked. After a few moments, she announced that her original choice was still the best selection. At that point Mark reminded Sharon that she was replacing a terminated buyer who did not go along with one of Daves previous preferred suppliers. What should Sharon do in this situation?arrow_forwardPlastics, Inc. and Joe's Canoe Shack both operate businesses located on the river. Plastics, Inc. dumps pollution into the river, which results in fewer canoe rentals for Joe. The marginal cost of cleaning up the pollution is $20,000 for Plastics, Inc. Joe estimates a reduction in pollution will lead to a marginal benefit of $13,000. a. If Joe owns the rights to the river, which of the following is the most likely outcome? O Plastics will use its property rights to continue polluting. O Joe will pay Plastics $17000 not to pollute. O Plastics will pay Joe $17000 to pollute. O Joe will enforce his property rights and not allow Plastics to pollute. b. If Plastics, Inc. owns the rights to the river, which of the following is the most likely outcome? Plastics will pay Joe $17000 to pollute. O Joe will enforce his property rights and not allow Plastics to pollute. O Plastics will use its property rights to continue polluting. O Joe will pay Plastics $17000 not to pollute.arrow_forward
- Sheffield Inc. wants to replace its current equipment with new high-tech equipment. The existing equipment was purchased 5 years ago at a cost of $129,000. At that time, the equipment had an expected life of 10 years, with no expected salvage value. The equipment is being depreciated on a straight-line basis. Currently, the market value of the old equipment is $43, 800. The new equipment can be bought for $176, 540, including installation. Over its 10-year life, it will reduce operating expenses from $192, 300 to $147, 200 for the first six years, and from $200, 400 to $190, 200 for the last four years. Net working capital requirements will also increase by $20, 600 at the time of replacement.It is estimated that the company can sell the new equipment for $24, 600 at the end of its life. Since the new equipment's cash flows are relatively certain, the project's cost of capital is set at 9%, compared with 15% for an average - risk project. The firm's maximum acceptable payback period is…arrow_forwardDLSU 40,000 (COB 5,000; CCS 15%; CLA 20%; COL 5% and others) Average price per computer device Php25,000Average price per Apple device Php30,000 In DLSU, students from COB, COL, and CLA purchased at least one (1) computer device in December 2020. What is the market penetration of computer device in the individual colleges? Given that students replace their computer devices once every 2 years on average, what is the projected market size (units/revenues) for computer devices for these colleges until the end of 2025? What is the concentration of sales/revenue of computer devices among the colleges (CDI)?arrow_forwardClassify the following risks into variation, foreseen uncertainty, unforeseen uncertainty, and chaos:e. The excavation process for a new manufacturing plant in the U.S. Midwestuncovers an archaeological find of such significance that no building can takeplace on that site and a new site for the plant must be found.arrow_forward
- Use the Scenario below to answer Question 3: CoolClothes Manufacturers is a large clothing manufacturing company based in Johannesburg, CoolClothes not only manufactures their own clothing line, they also distribute it to the various fashion outlets throughout the country. As the Head of Operations for CoolClothes, you have noticed a steady decline In demand over the last six months across all fashion outlets. Upon investigation, it has become apparent that the decline is as a result of customer dissatisfaction in the quality of the clothing found in stores. You are unsure of whether it is worth manufacturing at the same quantity or not given the decline in demand.arrow_forwardTechno Corporation is currently manufacturing an item at variable costs of $5 per unit. Annual fixed costs of manufacturing this item are $140,000. The current selling price of the item is $10 per unit, and the annual sales volume is 30,000 units. so Techno can substantially improve the item’s quality by installing new equipment at additional annual fixed costs of $60,000. Variable costs per unit would increase by $1, but, as more of the better-quality product could be sold, the annual volume would increase to 50,000 units. Should Techno buy the new equipment and maintain the current price of the item? Why or why not?arrow_forwardSt. Carmen’s hospital is considering two alternatives and analyzing their consequences over a 3-year period on the hospital budget. Alternative A = hire a pharmacist Alternative B = Buy an automated drug delivery system machine Alternative A’s costs are $90,000 salary plus 20% for fringe benefits per year for the next 3 years Alternative B’s costs for the automated system are $220,000 for the first year, $35,000 for the second year, and $35,000 for the third year. Alternative A’s savings are $150,000 per year for the next 3 years Alternative B’s savings are $120,000 per year for each of the 3 years Assuming a 5% discount rate, calculate: The net benefit of hiring a pharmacist The net benefit of the automated system The benefit-to-cost ratio of hiring a pharmacist The benefit-to-cost ratio for the automated system Which option, alternative A or alternative V, would be chosen based on the following: The net benefit calculations? Why? The…arrow_forward
- Problem 7-14 (Algo) AudioCables, Inc., is currently manufacturing an adapter that has a variable cost of $0.50 per unit and a selling price of $1.40 per unit. Fixed costs are $14,000. Current sales volume is 30,000 units. The firm can substantially improve the product quality by adding a new piece of equipment at an additional fixed cost of $6,000. Variable costs would increase to $0.60, but sales volume should jump to 50,000 units due to a higher-quality product. a. What is the current profit and proposed profit of the sales of AudioCables? (Negative amounts should be indicated by a minus sign.) Current profit Proposed profit b. Should Audio Cables buy the new equipment? No Yes O There is insufficient information provided to answer this questionarrow_forwardReliable Transportation Company limited is involved in the transportation of products for several manufactures island wide. In recent times the Government of Jamaica through the China Harbour Engineering Company (CHEC) has been involved in road infrastructural development island wide. Senior management of Reliable transportation has established several nodal points throughout the island including at the 2 major airports and they have hired you in the capacity of consultant to operations. Briefly state (Bullet points) to the senior management team three main types of risks and mitigation strategies as Reliable transports a shipment between 3 nodes.arrow_forwardThe annual operating costs of Machine A are $2,000. The machine will perform satisfactorily over the next five years and has an estimated market value (MV) of $3,000 at the end of its useful life. A salesperson for another company is offering a replacement, Machine B, for $14,000, with a MV of $1,400 after five years. Annual operating costs for Machine B will only be $1,500. It is believed that $10,000 could be obtained for the old machine A if it were sold now. If the before-tax MARR is 10% per year, determine whether the old machine A should be replaced by the new machine B.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
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
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY