# MANAGEMENT 3200 Operations Management, Homework 5. Questions and Answers.

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MANAGEMENT 3200Operations Management, Homework 1. Determine the utilization and the efficiency for each of these situations: a. A loan processing operation that processes an average of 6 loa ns per day. The operation has a design capacity of 20 loans per day and an effective capacity of 18 loans per day. (Round your answer to 1 decimal place. Omit the "%" sign in your response.) b. A furnace repair team that services an average of 4 furnaces a day if the design capacity is 7 furnaces a day and the effective capacity is 6 furnaces a day. (Round your answer to 1 decimal place. Omit the "%" sign in your response.) c. Would you say that systems that have higher efficiency ratios than other systems will always have higher utilization ratios than those other systems? 2. A small firm intends to increase the capacity of a bottleneck operation by adding a new machine. Two alternatives, A and B, have been identified, and the associated costs and revenues have been estimated. Annual fixed costs would be $38,000 for A and $31,000 for B; variable costs per unit would be $7 for A and $11 for B; and revenue per unit would be $19. a. Determine each alternative’s break-even point in units. (Round your answer to the nearest whole amount.) b. At what volume of output would the two alternatives yield the same profit? (Round your answer to the nearest whole amount.) c. If expected annual demand is 10,000 units, which alternative would yield the higher profit? 3. A producer of felt-tip pens has received a forecast of demand of 36,000 pens for the coming month from its marketing department. Fixed costs of $26,000 per month are allocated to the felt-tip operation, and variable costs are 31 cents per pen. a. Find the break-even quantity if pens sell for $1 each. (Round your answer to the next whole number.) b. At what price must pens be sold to obtain a monthly profit of $17,000, assuming that estimated demand materializes? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) 4. A real estate agent is considering changing her cell phone plan. There are three plans to choose from, all of which involve a monthly service charge of $20. Plan A has a cost of $.41 a minute for daytime calls and $.16 a minute for evening calls. Plan B has a charge of $.51 a minute for daytime calls and $.15 a minute for evening calls. Plan C has a flat rate of $80 with 300 minutes of calls allowed per month and a charge of $.38 per minute beyond that, day or evening. a. Determine the total charge under each plan for this case: 120 minutes of day calls and 40 minutes of evening calls in a month. (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.) c. If the agent will use the service for daytime calls, over what range of call minutes will each plan be optimal? (Round each answer to the nearest whole number.Include the indifference point itself in each answer.) d. Suppose that the agent expects both daytime and evening calls. At what point (i.e., percentage of total call minutes used for daytime calls) would she be indifferent between plans A and B? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places. Omit the "%" sign in your response.) Show Less

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