MyLab Operations Management with Pearson eText -- Access Card -- for Operations Management: Processes and Supply Chains
12th Edition
ISBN: 9780134742366
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter A, Problem 8P
Techno 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.
- 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?
- Alternatively, Techno could increase the selling price to $11 per unit. However, the annual sales volume would be limited to 45,000 units. Should Techno buy the new equipment and raise the price of the item? Why or why not?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Cost of quality”. Discuss and explain how it would be achieved for a company.
Perform a "product-by-value" analysis on the following products and recommend the products that
the company should keep producing and identify those that need to be investigated for potential
replacement.
Product
A
В
C
D
E
Unit Contribution $1.85
$2.1
$0.24
$1.25
$0.9
$1.80
Total
$155,000 $88,000
$40,000
$65,000
$62,000
$148,000
Contribution
keep
and
Investigate
and
Explain why "profits follow quality"
Chapter A Solutions
MyLab Operations Management with Pearson eText -- Access Card -- for Operations Management: Processes and Supply Chains
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
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
- Home-Style Cookies has decided to implement an employee suggestion to open a retail cookie shop in the front area of their manufacturing building in Hudson, New York. The employee offices currently occupying that space can easily be moved to the production area and there is ample parking for customers. Even though the plant is located in a small town, it is easily accessible and visible from the scenic highway which leads to Manhattan, New York. Through research and initial consumer testing, the retail shop will offer individual cookies for sale, pre-packaged dozen cookies (one kind of cookie), and gift cookie assortments in logoed tins in two sizes, 2-dozen and 3-dozen. The Home-Style executive team has hired you as a consultant to create the initial plan for the new retail shop. They have given you the first three months’ forecast, represented in the following table (Retail Shop Forecast). Embed your service blueprint in your document or submit it separately. Month Chocolate…arrow_forwardDesign Within Reach (DWR) Design Within Reach (DWR) is one of the leading hardwood furniture manufacturers. While DWR has many small competitors, none of them controls a significant market share. Like most furniture manufacturers, DWR sells its products to a wide variety of small furniture stores, none of which represents a large percentage of DWR's sales. DWR can choose among many wood (an undifferentiated commodity) suppliers to find the best price and delivery. The growth rate of the hardwood furniture industry has slowed considerably in recent years. Many consumers purchase "IKEA type" furniture made of composite wood, which is substantially less expensive than hardwood furniture. The level of direct competition in the hardwood furniture industry can best be described as moderate because the slowing growth rate offsets the numerous firms in the industry. low because of the numerous firms in the industry and the slowing growth rate low because of the slowing growth rate and the…arrow_forwardYou have just been hired as an intern with XYZ Sdn. Bhd. This company manufactures sportswear. Since you have taken a course on Energy and Sustainable Development in UNITEN, your supervisor has asked your opinion on how to improve the life-cycle sustainability of one their products, the XYZ Running Shoes. Prepare a brief outline of your recommendation, which should include FIVE (5) improvements that the company can implement to improve the sustainability of their product.arrow_forward
- Describe the difference between ideal quality, preferred quality, and adequate quality. - What is CRM and why is it important?.arrow_forwardGive one example of a product/service that you believe offers good quality. Justify.arrow_forwardMIPS's quality category has decreased from 60% to 45% over the last two years. The price category increased from 0% to 15%. What are the ramifications for businesses? Will the quality suffer as a result?arrow_forward
- Assess the pros and cons of Sam’s decision to use focus groups to generate the list of questions for service quality in place of using standard scale, SERVQUAL.?arrow_forwardHow can House of Quality objectives be achievedarrow_forwardHow does the "quality " dimension in marketing the Philadelphia Phillies as an entertainment service differ form that in marketing a consumer product such as a breakfast cereal?arrow_forward
- Define the four major costs of quality, and their relationship to the role of ethics in determining the overall costs of delivering products and services.arrow_forwardSmart Key Co.Ltd. Is planning to launch the newly invented Laser keyboard that lets you convert any surface into a keyboard. The keyboard connects to any devices with a Bluetooth such as your iPad or cellphone. In making the product available in the market, the company is seeking your advice in the following issues. 1. Analysis of Consumer Behavior & Decision Making of the product 2. Dissuss in details of STP of the products.arrow_forwardThe complete case study can be found using thefollowing link: https://www.penskelogistics.com/pdfs/06_whirlpool_case_study.pdf 4) How can Whirlpool Corporation implement a “cost of quality” analysis toprevent the impacts of poor conformance quality in the near future? Note this is not an essay.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Inventory Management | Concepts, Examples and Solved Problems; Author: Dr. Bharatendra Rai;https://www.youtube.com/watch?v=2n9NLZTIlz8;License: Standard YouTube License, CC-BY