Management Science 20 Problem Set 1. Background You own a specialty alarm company that services business that work with extremely high temperatures (restaurants, metals, power plants, etc.) Your alarms can detect excessive hout, smoke and carbon oxides (CO & CO2). You have two basic operations: Production (3) Installation (3) Production Operations For each alarm that you produce you generate roughly $350, it takes roughly 2.5 hours to produce each alarm: your operation work a standard 40 hour work week, and w in the number of alurms you can produce. Installation You generate about $80 for each alarm that you install it takes about two hours and to install these units your installations division works no more than 30 hours a week; and is the number of installations that you are capable of. 1 Managerial Problem Maximize the number of alarma produced and their installations Remember to provide the time frame (days weeks, etc.) over which you can maximize your values What is the maximum revenue generated? Can we use this model to generate profit? Provide some brief commentary stating why or why not 2. Background Your friend has music studio that a rich uncle has left him. The uncle was producing jazz CDs and some funk However, you convince your friend that Hip-Hop and Rap is where the money is. He agrees and the two of you begin to produce some highly specialize funk Hip-Hop that attracts an older high income market (you lucky dogs). Financial Data Your fixed cost is $80,000 Your variable and material costs are $3 per CD made Demand is 4000 CDs a month You want to sell each CD for $20 (the demand is there) Revenue, Cost, and Profit Problems to Deal with What is your break-even point? What or loss or profit situation can be anticipated with a demand of 4000 CD With a demand of 4000CDs, what is the minimum prie per CD you must charge to break Your friend thinks that you all can increase the price of a CD to $25 95 and not negatively affect the demand of 4000 CD Because you are a graduate of the Burrough School , you do an analysis of the new price consideration Based on your results, what should you recommend? Is there a profit or a lon? even