A manufacturer of lawn mowers finds the following relationship between price and demand for small garden...
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A manufacturer of lawn mowers finds the following relationship between price and demand for small garden lawn mowers: Price (P) = 500- 0.2 x Demand (D). The total fixed cost of manufacturing small lawn mowers is $100,000, while the company estimates variable costs of $150 per unit. (a) What is the level of production for revenue maximization? (7 marks) (b) What is the level of production for profit maximization and the profit earned by the company at this level of demand? (8 marks) (c) Past experience has shown that a 95% learning curve applies to the labor required for producing the item considered in part (a) and part (b). The time to complete the first item has been estimated to be 30 minutes. How long will it take to complete the 4th item and the 8th item respectively? (10 marks) A manufacturer of lawn mowers finds the following relationship between price and demand for small garden lawn mowers: Price (P) = 500- 0.2 x Demand (D). The total fixed cost of manufacturing small lawn mowers is $100,000, while the company estimates variable costs of $150 per unit. (a) What is the level of production for revenue maximization? (7 marks) (b) What is the level of production for profit maximization and the profit earned by the company at this level of demand? (8 marks) (c) Past experience has shown that a 95% learning curve applies to the labor required for producing the item considered in part (a) and part (b). The time to complete the first item has been estimated to be 30 minutes. How long will it take to complete the 4th item and the 8th item respectively? (10 marks)
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a To find the level of production for revenue maximization we need to maximize the revenue function ... View the full answer
Related Book For
Operations management in the supply chain decisions and cases
ISBN: 978-0077835439
7th edition
Authors: Roger G Schroeder, M. Johnny Rungtusanatham, Susan Meyer Goldstein
Posted Date:
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