Question

Problem 1 AlwaysRain Irrigation, Inc., would like to determine capacity requirements for the next four years. Currently two production lines are in place for making bronze and plastic sprinklers. Three types of sprinklers are available in both bronze and plastic: 90-degree nozzle sprinklers, 180- degree nozzle sprinklers, and 360-degree nozzle sprinklers. Management has forecast demand for the next four years as follows: 1 in 000s) 32 44 Plastic 90 Plastic 180 Plastic 360 Bronze 90 Bronze 180 Bronze 360 20 45 10 Yearly Demand 2 (in 000s) 3 (in 000s) 4 (in 000s) 55 56 25 30 25 50 6062 7 8 5 6 9 16 17 20 7 10 Both production lines can produce all the different types of nozzles. The bronze machine needed for the bronze sprinklers require two operators and can produce up to 10,000 sprinklers. The plastic injection molding machine needed for the plastic sprinklers requires four operators and can produce up to 150,000 sprinklers. Three bronze machines and only one injection molding machine are available. What are the capacity requirements for plastics and bronze sprinklers for the next four years? Problem 2: A book publisher has fixed costs of $90,000 and variable costs per book of $5.00. The book sells for $25.00 per copy. a. How many books must be sold to break even? b. If the variable cost per unit decreased, would the new break-even point be higher or lower? c. If the fixed cost increased, would the new break-even point be higher or lower? Problem 3: A manufacturing process has a fixed cost of $70,000 per month. Each unit of product being produced contains $25 worth of material and takes $45 of labor. How many units are needed to break even if each completed unit has a value of $120?

Answer 1

Problem 1

А В E Plastic Year1 Year2 Year3 Year4 Demand(000's) Capacity(000's) 2 97 119 145 143 150 150 150 150 % of capacity used 64.67% 79.33% 96.67% 95.33% 4 Machine requirements 5 0.65 0.79 0.97 0.95 Labor requirements 6 2.59 3.17 3.87 3.81

A С E Plastic 1 Year1 Year2 Year3 Year4 32+20+4544+25+50 55+30+6056+25+62 Demand(000's) 2 Capacity(000's) % of capacity used 150 150 150 |-B2/вз Machine requirements B2/B3 Labor requirements B5*4 150 3 |ЕC2/сз ЕC2/с3 |ЕC5*4 D2/D3 D2/D3 =E2/E3 E2/E3 4 5 D5*4 E5*4 6 st

A С Е Year2 1 Bronze Year1 Year3 Year4 Demand(000's) Capacity(000's) 2 26 28 30 37 3 30 30 30 30 93.33%100.00%123.33% % of capacity used 86.67% 4 Machine requirements 3.08 5 2.60 2.33 2.50 Labor requirements 5.20 6.17 6 4.67 5.00 7 st LC C

A B С E Year2 1 Bronze Year1 Year3 Year4 Demand(000's) Capacity(000's) % of capacity used B2/B3 5 Machine requirements -B2/10 Labor requirements B5*2 10+6+ 10 7+5+16 = 10*3 |ЕC2/с3 C2/12 |ЕC5*2 7+6+ 17 8+9+20 2 -10*3 10*3 10*3 3 -E2/E3 =E2/12 D2/D3 4 D2/12 E5*2 D5*2 6 st