Chapter$-5$

Practice Problem $12($pg$.219)$

$($Please provide your solution to this practice problem showing your calculations with explanations as

necessary.$)$

A manager must decide how many machines of a certain type to purchase. Each machine can process

$100$ customers per day. One machine will result in a fixed cost of $$2,000$ per day, while two machines

will result in a fixed cost of $$3,800$ per day. Variable costs will be $$20$ per customer, and revenue will be

$$45$ per customer.

Given: $R=$$$45$ per customer, $v=$$$20$ per customer, each machine can process $100$ customers per day,

fixed cost for one machine $=$$$2,000$ per day total; and fixed cost for two machines $=$$$3,800$ per day

total.

a$.$ Determine the break$-$even point for each range by filling out the rightmost formula column and

showing your calculations below.

b$.$ If estimated demand is $90$ to $120$ customers per day, how many machines should be purchased

and why?