A poultry farmer is debating whether to acquire Rhode Island Reds or Buff Orpingtons to lay the eggs he wants to sell. The fixed costs for the Buffs would be $7500 and the variable costs per egg would be a dime per egg. The Reds would have a fixed cost of $6000 and a variable cost of fifteen cents. At what level of egg production would the poultry farmer be indifferent between

Rhode Island Reds and Buff Orpingtons? (Please perform a Break-Even Analysis)

1. A company begins a review of ordering policies for its continuous review system by checking the current policies for a sample of items. Following are the characteristics of the item:

Demand = 320 units/month

Ordering cost = 5240/order

Holding cost = 52/unit/year

Lead time = 2 months

Standard deviation of monthly demand = 25 units

Cycle-service level = 95%

a). What is the EOQ for this item?

b). What is the required safety stock to meet the cycle-service level?

c). What is the reorder point?

2. A retail store sells greeting cards. Last week sales for a seven-day period were as follows:

Please forecast the next Monday sales using each of the following techniques: a). A weighted moving average with weights (0.6, 0.3, 0.1), starting with the most recent day. b). Exponential smoothing with a smoothing constant equal to .20, using na?ve method to start the forecast for Tuesday. c). Develop a linear trend line equation. d). Which method appears to be most accurate among the above three methods? Why?

3. The operations manager for a local bus company wants to decide whether he should purchase a small, medium, or large new bus for his company. He estimates that the annual profits (in $000) will vary depending upon whether passenger demand is low, moderate, or high, as follows: a). If he uses the maximin criterion, which size bus will he decide to purchase? b). If he uses the minimax regret criterion, which size bus will he decide to purchase? c). If he feels the chances of low, moderate, and high demand are 30%, 30%, and 40% respectively, what is the expected annual profit for the bus that he will decide to purchase? d). If he feels the chances of low, moderate, and high demand are 30%, 30%, and 40% respectively, what is his expected value of perfect information?

4. It's 75 degrees and sunny here in San Diego this afternoon...," the weatherman droned on, repeating a phrase that probably should have been recorded and played on an endless loop. Tim looked at the previous year's high temperatures and noted that the average was 75 degrees with a standard deviation of 2.5 degrees and approximated a normal distribution. Armed with this evidence, determine: a). Thc probability of a daily temperature between 79 degrees F and 85 degrees F.

b). Thc probability that the daily temperature exceeds 80 degrees F.

c). The probability that the daily temperature is below 74 degrees F.

5. Bob White is conducting research on monthly expenses for medical care, including over-the-counter medicine. His dependent variable is monthly expenses for medical care while his independent variable is number of family members. Below is his Excel output. a) What is the prediction equation? b) Based on his model, each additional family member increases the predicted costs by how much? c) Based on the significance F-test, is this model a good prediction equation? d) Can the null hypothesis that the slope is zero be rejected? Why or why not? c) What is the value of the correlation coefficient?

Week day Mon Tue Wed Thu Fri Sat Sun Sales 19 18 15 20 18 29528 20 Bus Small Medium Large LOW 50 40 20 DEMAND MEDIUM 60 80 50 HIGH 70 90 120 SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations ANOVA Regression Residual Total Intercept X df 0.695 0.483 0.474 55.278 21 19 20 SS 99929.47 58057.48 157987 Coefficients Standard Error 35.53407 0.819024 110.47 16.83 MS 99929.47 3055.657 1 Stat 3.109087 5.718663 F 32.70311 P-Value 0.0057 0.00016 Significance F 0.00016