OPERATIONS MANAGEMENT CUSTOM ACCESS
11th Edition
ISBN: 9780135622438
Author: KRAJEWSKI
Publisher: PEARSON EDUCATION (COLLEGE)
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Chapter A, Problem 6P
A news clipping service is considering modernization. Rather than manually clipping and photocopying articles of interest and mailing them to its clients, employees electronically input stories from most widely circulated publications into a database. Each new issue is searched for key words, such as a client’s company name, competitors’ names, type of business, and the company’s products, services, and officers. When matches occur, affected clients are instantly notified via an online network. If the story is of interest, it is electronically transmitted, so the client often has the story and can prepare comments for follow-up inter-views before the publication hits the street. The manual process has fixed costs of $400,000 per year and variable costs of $6.20 per clipping mailed. The price charged the client is $8.00 per clipping. The computerized process has fixed costs of $1,300,000 per year and variable costs of $2.25 per story electronically transmitted to the client.
- If the same price is charged for either process, what is the annual volume beyond which the automated process is more attractive?
- The present volume of business is 225,000 clippings per year. Many of the clippings sent with the current process are not of interest to the client or are multiple copies of the same story appearing in several publications. The news clipping service believes that by improving service and by lowering the price to $4.00 per story, modernization will increase volume to 900,000 stories transmitted per year. Should the clipping service modernize?
- If the
forecasted increase in business is too optimistic, at what volume will the new process (with the $4.00 price) break even?
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This assignment requires the use of the concepts and theories learned to analyze a current event in the business world. It needs to be relevant to strategic management and has the quality of analysis of the situation from the article.
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Chapter A Solutions
OPERATIONS MANAGEMENT CUSTOM ACCESS
Ch. A - Mary Williams, owner of Williams Products, is...Ch. A - Prob. 2PCh. A - An interactive television service that costs $10...Ch. A - A restaurant is considering adding fresh brook...Ch. A - Spartan Castings must implement a manufacturing...Ch. A - A news clipping service is considering...Ch. A - Prob. 7PCh. A - Techno Corporation is currently manufacturing an...Ch. A - The Tri-County Generation and Transmission...Ch. A - Prob. 10P
Ch. A - Tri-County G&T sells 150,000 MWh per year of...Ch. A - The Forsite Company is screening three ideas for...Ch. A - Prob. 13PCh. A - Prob. 14PCh. A - Janice Gould of Krebs Consulting is in the process...Ch. A - Build-Rite Construction has received favorable...Ch. A - Prob. 17PCh. A - Prob. 18PCh. A - Prob. 20PCh. A - Prob. 21PCh. A - Prob. 22PCh. A - Prob. 24P
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