1. Chapter 7 - Crossover Charts - 10 Marks Karla's candle factory is considering two different machines. Machine A is highly automated with FC of $25,000 and VC of $0.20/candle. Machine B is more modest, FC of $10,000 and VC of $0.50/candle. If demand for Karla's candles is 45,000 over the period of operation, which machine should she pick? Answer: Which Machine should Karla pick? 2 Marks Show each step in your calculations in area below (mandatory): 8 Marks 2. Chapter 7 Supplement - Capacity - 10 Marks An executive conference centre has the physical ability to handle 1.200 participants. However, conference management personnel believe that only 1,050 participants can be handled effectively for most events. The last event, although forecasted to have 1,000 participants, resulted in the attendance of only 880 participants. What are the utilization and efficiency of the conference facility? Answer: a) What is the Design Capacity of the Centre? 2 Marks b) What is the Effective Capacity of the Centre? 2 Marks Write formulas and show steps in calculations below (mandatory): 6 Marks 3. Chapter 7 - Supplement - Breakeven Analysis 10 Marks The local convenience store makes personal pan pizzas. Currently, their existing oven can produce 55 pizzas per hour. It has a fixed cost of $4,000, and a variable cost of $0.62 per pizza. Because of COVID 19 and increased take-outs the owner is considering a new bigger oven that can make 90 pizzas per hour. It has a fixed cost of $6,200, but a variable cost of S0.40 per pizza. a. At what quantity do the two ovens have equal total costs? b. If the owner expects to sell 15,000 pizzas, should they get the new oven? c. If the Selling Price of the pizza is $3.00 each, how much profit will they make with sales 19,000 pizzas? Answer: a. At what quantity do the two ovens have equal costs? 2 Marks b. If the owner expects to sell 15,000 pizzas, should he get the new oven? 2 Marks c. How much profit will they make with sales 19,000 pizzas? 2 Marks Show Calculations Here (mandatory): 4 Marks 4. Chapter 11- Economics of The Supply Chain - 10 Marks A transportation firm spends 60% of its sales in the supply chain and has a net profit margin of 6%. The company is about to invest $100,000 in one of two ventures. One venture is advertising-based and is expected to increase revenues (sales) by $600,000 (after spending the $100.000). The other venture applies the money in supply-chain improvements that are expected to save $200,000 (again, after spending the $100.000). Which of these two ventures offers the larger increase in profit to the firm? Use Table 11.4 in the textbook or from of PPs from Chapter 11. See Next Page Answer: Which of these two ventures offers the larger increase in profit to the firm? 2 Marks Show Calculations Here (mandatory): 8 Marks 2- Supply Chain Economics This table shows the dollars of additional sales needed to equal $1 saved through the supply chain e.g. If percent net profit is 4%, and if 60% of sales is spent in the Supplyly Chain, we need to increase sales by $4.55 to get $1.00 more profit:it. Percent of Sales Spent in the Supply Chain Percent Net Profit margin of Firm 40% 50% 60% 70% 80% 90% 2 $3.23 $3.85 $4.76 $6.25 $9.09 $16.67 4 $3.13 $3.70 $4.55 $5.88 $8.33 $14.29 6 $3.03 $3.57 $4.35 $5.56 $7.69 $12.50 8 $2.94 $3.45 $4.17 $5.26 $7.14 $11.11 10 $2.86 $3.33 $4.00 $5.00 $6.67 $10.00 Table 11.4 shows the additional revenue required to get $1 of additional profitit 5. Chapter 11- Transportation Costs A shipment of parts valued at $85,000 needs to be shipped from Thunder Bay, to Trail. They could be shipped by rail, taking 8 days at a cost of $1,525, or by truck, taking 3 days at a cost of $1,940. The annual holding cost rate for this type of item has been estimated at 17%. What option is more economical? Answer: What is the daily holding cost for this item? 2 Marks What option is more economical? Rail or Truck? 2 Marks Show Steps in Calculations Here (mandatory): 6 Marks 6. Chapter 12- Inventory Debra's Dirt Bike Club has a favorite model that has annual sales of 168. The cost to place an order to replenish inventory is $80 per order, and annual inventory holding costs are $32/unit. a. What is the optimal order size? b. What is the maximum inventory level? c. What is the average inventory? d. What is the annual inventory cost? e. What are the number of orders per year? a Answer: a. What is the optimal order size? 1 Mark b. What is the maximum inventory level? 1 Mark c. What is the average inventory? 1 Mark d. What is the annual inventory cost? 1 Mark e. What are the number of orders per year? 1 Mark Show Steps in Calculations Here (mandatory): 5 Marks