Question 1: An Industrial Production Company considers adding to its product lines a new "gadget" similar to one they used to produce 10 years ago, but much larger. The Manager collects the following data on which to base his/her decision: Size of the "gadget" will be double the size of the one they produced 10 years ago The Power Sizing Factor for this kind of gadgets" is 0.62 The production cost for the "gadget" 10 years ago was $ 300 per unit The price they were able to sell the "gadget" 10 years ago was $ 600 per unit The Cost Index for the gadget 10 years ago was 160, it is now 220 To expand production, the Company will need to rent additional space at a cost of $ 5,500 per month Before deciding on the implementation, the Manager wants to know how many units they must produce and sell for breaking-even. Hint: (1) assume the Power Sizing Factor and Cost Indexes apply to both production cost and selling price; (2) proceed by calculating the unit production cost and selling price for the larger "gadget" now; (3) build the break-even graph in excel Question 2: The production time needed to produce the first unit of a certain "gadget" is T1 = 50 hrs, and the Learning Curve Rate of such production, as measured by the Production Manager, is 67%. Build the curve of Unit Production Time for units from 1 to 20 Question 1: An Industrial Production Company considers adding to its product lines a new "gadget" similar to one they used to produce 10 years ago, but much larger. The Manager collects the following data on which to base his/her decision: Size of the "gadget" will be double the size of the one they produced 10 years ago The Power Sizing Factor for this kind of gadgets" is 0.62 The production cost for the "gadget" 10 years ago was $ 300 per unit The price they were able to sell the "gadget" 10 years ago was $ 600 per unit The Cost Index for the gadget 10 years ago was 160, it is now 220 To expand production, the Company will need to rent additional space at a cost of $ 5,500 per month Before deciding on the implementation, the Manager wants to know how many units they must produce and sell for breaking-even. Hint: (1) assume the Power Sizing Factor and Cost Indexes apply to both production cost and selling price; (2) proceed by calculating the unit production cost and selling price for the larger "gadget" now; (3) build the break-even graph in excel Question 2: The production time needed to produce the first unit of a certain "gadget" is T1 = 50 hrs, and the Learning Curve Rate of such production, as measured by the Production Manager, is 67%. Build the curve of Unit Production Time for units from 1 to 20
