A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. Process A has a fixed cost of $500,000 and a variable cost of $25 per unit. Process B has a fixed cost of $750,000 and a variable cost of $23 per unit. For what level of volume (output) would the firm prefer Process B to Process A?

An operations manager is deciding on the level of automation for a new process. The fixed cost for automation includes the equipment purchase price, installation, and initial spare parts. The variable costs per unit for each level of automation are primarily labor related. Each unit can be sold for $88. As in many cases, you have the default alternative of doing nothing ($0 fixed cost, $0 variable costs). Hint: For these questions, also consider the Do Nothing option as a viable option when making your decision.

Alternative	Fixed Costs	Variable Costs per Unit
A	$100,000	$54
B	$270,000	$42
C	$560,000	$20

Recommended: graph each alternative with units on the x-axis and $ on the y-axis. Also, include revenue on the chart. Identify the break-even points and points of indifference.

What is the break-even point for option B?

An operations manager is deciding on the level of automation for a new process. The fixed cost for automation includes the equipment purchase price, installation, and initial spare parts. The variable costs per unit for each level of automation are primarily labor related. Each unit can be sold for $79. As in many cases, you have the default alternative to "do nothing" ($0 fixed cost, $0 variable costs).

Alternative	Fixed Costs	Variable Costs per Unit
A	$100,000	$54
B	$275,000	$37
C	$560,000	$20

Recommended: graph each alternative with units on the x-axis and $ on the y-axis. Also, include revenue on the chart. Identify the break-even points and points of indifference.

When comparing Alternative B to Alternative C, C is the most attractive option above

The Sellinger Business Schools Information Technology Service (ITS) is considering a new process to refurbish older computers in order to save on costs of buying new computers. The five steps to the process are:

Step	Description	Time per computer
1	Move the machine to their work area	2.4 minutes
2	Scrub and clean hardware	14.2 minutes
3	Strip off old operating system	8.9 minutes
4	Install new operating system & software	12.5 minutes
5	Move machine back to its previous location	6.7 minutes

One member of ITS will be assigned to each step. Each member will work a 40 hours per week and rotate jobs each week. Demand is forecasted at having to refurbish 431 computers per week. ITS is unsure that they can deliver on the promise.

What many minutes does the bottleneck step take?

The Sellinger Business Schools Information Technology Service (ITS) is considering a new process to refurbish older computers in order to save on costs of buying new computers. The five steps to the process are:

Step	Description	Time per computer
1	Move the machine to their work area	2.4 minutes
2	Scrub and clean hardware	14.2 minutes
3	Strip off old operating system	8.9 minutes
4	Install new operating system & software	12.5 minutes
5	Move machine back to its previous location	6.7 minutes

One member of ITS will be assigned to each step. Each member will work 40 hours per week and rotate jobs each week. Demand is forecasted at having to refurbish 431 computers per week. ITS is unsure that they can deliver on the promise.

Assuming the process runs as designed, what is the maximum weekly output?

The Sellinger Business Schools Information Technology Service (ITS) is considering a new process to refurbish older computers in order to save on costs of buying new computers. The five steps to the process are:

Step	Description	Time per computer
1	Move the machine to their work area	2.4 minutes
2	Scrub and clean hardware	14.2 minutes
3	Strip off old operating system	8.9 minutes
4	Install new operating system & software	12.5 minutes
5	Move machine back to its previous location	6.7 minutes

One member of ITS will be assigned to each step. Each member will work a 40 hours per week and rotate jobs each week. Demand is forecasted at having to refurbish 431 computers per week. ITS is unsure that they can deliver on the promise.

After 8 hours, how many units of work-in-process (WIP) will be at station 2 (or think of it as between station 1 and 2) if all stations are working at their maximum capacity (assume steady state)?

The Sellinger Business Schools Information Technology Service (ITS) is considering a new process to refurbish older computers in order to save on costs of buying new computers. The five steps to the process are:

Step	Description	Time per computer
1	Move the machine to their work area	2.4 minutes
2	Scrub and clean hardware	14.2 minutes
3	Strip off old operating system	8.9 minutes
4	Install new operating system & software	12.5 minutes
5	Move machine back to its previous location	6.7 minutes

One member of ITS will be assigned to each step. Each member will work 40 hours per week and rotate jobs each week. Demand is forecasted at having to refurbish 431 computers per week. ITS is unsure that they can deliver on the promise.

What is the takt time? Will ITS be able to keep up with this demand?