76 The company will have to add capacity over the next decade to satisfy demand. 77 78 Unit Operating Cost Operating Scale Economies 79 Economies of Scale in Plant Construction Capital Capacity Expenditure CapEx Scale Expansion (Units) (CapEx) CapEx/ Unit Economies 100 $35,000 $350 150 $45,000 $300 -14% 300 $75,000 $250 -29% 80 $50 $45 $40 $ 81 82 -10% -20% 83 86 89 84 The above cost of Plant Construction demonstrates significant 'economies of scale'. 85 Economies of scale, enjoying a lower unit cost for a larger scale operation or investment, is common. Notice how the Capex/Unit declines from $350 to $250 as the number of units of capacity added increases. 87 Furthermore the Unit Operating Cost declines from $50 to $40 as the number of units of capacity added increases. 88 Software development affords the ultimate level of economies of scale as once software is developed there is absolutely no additional cost for additional use. This is true for all intellectual property including entertainment content and pharmaceutical and other medical technologies. 90 The model permits users to select the size of Capacity Expansion in Units 91 Capacity Expansion (Units) 1501 92 Write a formula using an IF (conditional) function in the green box below that selects the unit cost based on the Capacity Expansion above. 93 Unit Operating cost 94 Hint: If you hard code the Unit Operating Cost of $45 related to Capacity Expansion of 150 Units downstream questions will be graded as incorrect. 95 Write formulas in row 101 such that capacity is increased by the quantity selected in 191 in all years in which Capacity would not satisfy the Company's Unit Sales' in the following year. 96 Calculate the Incremental Unit Sales as the Company's Unit Sales minus the Capacity Constrained Unit Sales. 2029 500 2030 500 92 Write a formula using an IF (conditional) function in the green box below that selects the unit cost based on the Capacity Expansion above. 93 Unit Operating cost 94 Hint: If you hard code the Unit Operating cost of $45 related to Capacity Expansion of 150 Units downstream questions will be graded as incorrect. 95 Write formulas in row 101 such that capacity is increased by the quantity selected in B91 in all years in which Capacity would not satisfy the Company's Unit Sales' in the following year. 96 Calculate the incremental Unit Sales as the Company's Unit Sales minus the capacity Constrained Unit Sales. 97 98 2020 2021 2022 2023 2024 2025 2026 2027 2028 99 Capacity 500 500 500 500 500 500 500 500 500 100 101 Capacity Expansion (Units) 102 103 Cumulative Additional Capacity 0 0 0 0 0 0 0 0 104 105 Incremental Unit Sales 106 Product A 107 Product B 108 0 0 76 The company will have to add capacity over the next decade to satisfy demand. 77 78 Unit Operating Cost Operating Scale Economies 79 Economies of Scale in Plant Construction Capital Capacity Expenditure CapEx Scale Expansion (Units) (CapEx) CapEx/ Unit Economies 100 $35,000 $350 150 $45,000 $300 -14% 300 $75,000 $250 -29% 80 $50 $45 $40 $ 81 82 -10% -20% 83 86 89 84 The above cost of Plant Construction demonstrates significant 'economies of scale'. 85 Economies of scale, enjoying a lower unit cost for a larger scale operation or investment, is common. Notice how the Capex/Unit declines from $350 to $250 as the number of units of capacity added increases. 87 Furthermore the Unit Operating Cost declines from $50 to $40 as the number of units of capacity added increases. 88 Software development affords the ultimate level of economies of scale as once software is developed there is absolutely no additional cost for additional use. This is true for all intellectual property including entertainment content and pharmaceutical and other medical technologies. 90 The model permits users to select the size of Capacity Expansion in Units 91 Capacity Expansion (Units) 1501 92 Write a formula using an IF (conditional) function in the green box below that selects the unit cost based on the Capacity Expansion above. 93 Unit Operating cost 94 Hint: If you hard code the Unit Operating Cost of $45 related to Capacity Expansion of 150 Units downstream questions will be graded as incorrect. 95 Write formulas in row 101 such that capacity is increased by the quantity selected in 191 in all years in which Capacity would not satisfy the Company's Unit Sales' in the following year. 96 Calculate the Incremental Unit Sales as the Company's Unit Sales minus the Capacity Constrained Unit Sales. 2029 500 2030 500 92 Write a formula using an IF (conditional) function in the green box below that selects the unit cost based on the Capacity Expansion above. 93 Unit Operating cost 94 Hint: If you hard code the Unit Operating cost of $45 related to Capacity Expansion of 150 Units downstream questions will be graded as incorrect. 95 Write formulas in row 101 such that capacity is increased by the quantity selected in B91 in all years in which Capacity would not satisfy the Company's Unit Sales' in the following year. 96 Calculate the incremental Unit Sales as the Company's Unit Sales minus the capacity Constrained Unit Sales. 97 98 2020 2021 2022 2023 2024 2025 2026 2027 2028 99 Capacity 500 500 500 500 500 500 500 500 500 100 101 Capacity Expansion (Units) 102 103 Cumulative Additional Capacity 0 0 0 0 0 0 0 0 104 105 Incremental Unit Sales 106 Product A 107 Product B 108 0 0