QUESTION 4

A). Describe the differences among make-to-order, assemble-to-order, and make-to-stock strategies from the producer's and from the customer's perspective.

B) Two manufacturing processes are being considered for making a new product. Process #1 is less capital intensive, with fixed costs of $50,000 per year and variable costs of $700 per unit. Process #2 has fixed costs of $400,000 annually, with variable costs of $200 per unit.

a. What is the break-even quantity for the two processes?

b. If annual sales are expected to be 600 units, which process should be selected?

c. If lowest overall costs per year is your overall objective, for what range of annual production quantities should you select Process #1? Process #2?

d. Operations and Engineering have found a way to reduce the cost of Process #2, such that the fixed costs for this process decrease from $400,000 to $300,000 annually. All other costs remain the same (Process #1 fixed = $50,000 / year, Process #1 variable = $700 / unit, Process #2 variable = $200 / unit). What is the new break-even quantity between the two processes?

e. Does this change the process selection for the annual sales volume of 600 units? If so, for what range of annual production quantities should you select Process #1 and Process #2?

C)An executive conference center has the physical ability to handle 1,500 participants. However, conference management personnel believe that only 1,300 participants can be handled effectively for most events. The last event, although forecasted to have 1,300 participants, resulted in the attendance of only 1080 participants. What are the utilization and efficiency of the conference facility?

D).25) A local business owner is considering adding another employee to his staff in an effort to increase the number of hours that the store is open per day. If the employee will cost the owner $4,000 per month and the store takes in $50/hour in revenue with variable costs of $15/hour, how many hours must the new employee work for the owner to break even?

E) A graphic design studio is considering three new computers. The first model, A, costs $5000. Model B and C cost $3000 and $1000 respectively. If each customer provides $50 of revenue and variable costs are $20/customer, find the number of customers required for each model to break even.