Operations Management 2016 Edition Eckstein Solutions Manual
Given Data:. Variable costs of each unit produced and sold is $6. The fixed cost per year $60,000. Selling price is $18 Graphic approach: Total annual cost = F + c Q. To solve graphically, plot two lines one for cost and one for revenues. Two points determine a line, so begin by calculating costs and revenues for two different output levels.
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The following table shows the results for Q=0 and Q= 9,000. Select zero as the first point because of the ease of plotting total revenue (0) and total cost (F). However, one could have used any two reasonably spaced output levels. Quality (Q) Total annual cost (F + c Q) Total annual revenue (p Q) 0 60,000 0 90000 114,000 162,000 Now draw the line through points (0, 60,000) and (9,000, 114,000). The revenue line goes between (0, 0) and (90,000, 162,000).
As figure indicates, these two lines interest. 5,000 units the break-even point. Operations managers make many decisions as they manage process and supply chains, and decision making generally involves the same basic steps. Trumpf laser user manual. Recognize and clearly define the problem. Collect the information needed to analyze possible alternative.
Choose and implement the most feasible alternatives. Operations managers follow four types of formal procedures i.e break even analysis, the preference decision tree, preference matrix decision theory, and the decision tree are all considered as crucial to the final decision.
The preference matrix helps a manager to deal with multiple criteria. Decision theory helps the manager to choose the best alternative, and the decision tree helps the manager when decisions are made sequentially.
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