M N 2029 A B D E F G H J K L 60 Capacity Expansion Model 61 Product A and B require the same amount of capacity to manufacture. That simplifies the analysis of capacity as we can measure capacity in 'units' of Product A and B as a common denominator. 62 The company will choose to deploy scarce capacity on the most profitable products. 63 The price of Product A is $100 and the price of Product B is $90. 64 Therefore, the company will manufacture Product A before Product B. 65 The company currently has 500 units of capacity. 66 The Capacity Constrained forecast of sales is based on the scenario that no capacity is added. 67 Write formulas in the green boxes below to calculate how many units of each product would be sold. 68 Hint: You will need to use a MIN/MAX/IF function. 69 70 2020 2021 2022 2023 2024 2025 2026 2027 2028 71 Capacity Constrained Unit Sales 72 Product A 73 Product B 74 75 The company will have to add capacity over the next decade to satisfy demand, 76 77 Economies of Scale in Plant Construction Capital Unit Operating Capacity Expenditure CapEx Scale Operating Scale 78 Expansion (Units) (CapEx) CapEx/ Unit Economies Cost Economies 79 100 $35,000 $350 $50 80 150 $45,000 $300 -14% $45 -10% 81 300 $75,000 $250 -29% S40 -20% 82 83 The above Cost of Plant Construction demonstrates significant economies of scale'. 84 Economies of scale, enjoying a lower unit cost for a larger scale operation or investment, is common. 85 Notice how the Capex/Unit declines from $350 to $250 as the number of units of capacity added increases. 86 Furthermore the Unit Operating cost declines from $50 to $40 as the number of units of capacity added increases. 87 Software development affords the ultimate level of economies of scale as once software is developed there is absolutely no additional cost for additional use. 88 This is true for all intellectual property including entertainment content and pharmaceutical and other medical technologies. 89 The model permits users to select the size of Capacity Expansion in Units 90 Capacity Expansion (Units) 150 91 Write a formula using an IF (conditional) function in the green box below that selects the unit cost based on the Capacity Expansion above. 92 Unit Operating cost 93 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. os - Capture 4.PNG See all photos + Add to B E F G H 1 60 Capacity Expansion Model 61 Product A and B require the same amount of capacity to manufacture. That simplifies the analysis of capacity as we can measure capacity in 'units' of 62 The company will choose to deploy scarce capacity on the most profitable products. 63 The price of Product A is $100 and the price of Product B is $90. 64 Therefore, the company will manufacture Product A before Product B. 65 The company currently has 500 units of capacity. 66 The Capacity Constrained forecast of sales is based on the scenario that no capacity is added 67 Write formulas in the green boxes below to calculate how many units of each product would be sold. 68 Hint: You will need to use a MIN/MAX/IF function. 69 70 2020 2021 2022 2023 2024 2025 71 Capacity Constrained Unit Sales 72 Product A 73 Product B 74 75 The company will have to add capacity over the next decade to satisfy demand, 76 77 Economies of Scale in Plant Construction Capital Unit Operating Capacity Expenditure CapEx Scale Operating Scale 78 Expansion (Units) (CapEx) CapEx/ Unit Economies Cost Economies 79 100 $35,000 $350 $50 $300 -14% $45 -10% RO 10 45.000 M N 2029 A B D E F G H J K L 60 Capacity Expansion Model 61 Product A and B require the same amount of capacity to manufacture. That simplifies the analysis of capacity as we can measure capacity in 'units' of Product A and B as a common denominator. 62 The company will choose to deploy scarce capacity on the most profitable products. 63 The price of Product A is $100 and the price of Product B is $90. 64 Therefore, the company will manufacture Product A before Product B. 65 The company currently has 500 units of capacity. 66 The Capacity Constrained forecast of sales is based on the scenario that no capacity is added. 67 Write formulas in the green boxes below to calculate how many units of each product would be sold. 68 Hint: You will need to use a MIN/MAX/IF function. 69 70 2020 2021 2022 2023 2024 2025 2026 2027 2028 71 Capacity Constrained Unit Sales 72 Product A 73 Product B 74 75 The company will have to add capacity over the next decade to satisfy demand, 76 77 Economies of Scale in Plant Construction Capital Unit Operating Capacity Expenditure CapEx Scale Operating Scale 78 Expansion (Units) (CapEx) CapEx/ Unit Economies Cost Economies 79 100 $35,000 $350 $50 80 150 $45,000 $300 -14% $45 -10% 81 300 $75,000 $250 -29% S40 -20% 82 83 The above Cost of Plant Construction demonstrates significant economies of scale'. 84 Economies of scale, enjoying a lower unit cost for a larger scale operation or investment, is common. 85 Notice how the Capex/Unit declines from $350 to $250 as the number of units of capacity added increases. 86 Furthermore the Unit Operating cost declines from $50 to $40 as the number of units of capacity added increases. 87 Software development affords the ultimate level of economies of scale as once software is developed there is absolutely no additional cost for additional use. 88 This is true for all intellectual property including entertainment content and pharmaceutical and other medical technologies. 89 The model permits users to select the size of Capacity Expansion in Units 90 Capacity Expansion (Units) 150 91 Write a formula using an IF (conditional) function in the green box below that selects the unit cost based on the Capacity Expansion above. 92 Unit Operating cost 93 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. os - Capture 4.PNG See all photos + Add to B E F G H 1 60 Capacity Expansion Model 61 Product A and B require the same amount of capacity to manufacture. That simplifies the analysis of capacity as we can measure capacity in 'units' of 62 The company will choose to deploy scarce capacity on the most profitable products. 63 The price of Product A is $100 and the price of Product B is $90. 64 Therefore, the company will manufacture Product A before Product B. 65 The company currently has 500 units of capacity. 66 The Capacity Constrained forecast of sales is based on the scenario that no capacity is added 67 Write formulas in the green boxes below to calculate how many units of each product would be sold. 68 Hint: You will need to use a MIN/MAX/IF function. 69 70 2020 2021 2022 2023 2024 2025 71 Capacity Constrained Unit Sales 72 Product A 73 Product B 74 75 The company will have to add capacity over the next decade to satisfy demand, 76 77 Economies of Scale in Plant Construction Capital Unit Operating Capacity Expenditure CapEx Scale Operating Scale 78 Expansion (Units) (CapEx) CapEx/ Unit Economies Cost Economies 79 100 $35,000 $350 $50 $300 -14% $45 -10% RO 10 45.000