Problem 1

AlwaysRain Irrigation, Inc., would like to determine capacity requirements for the next four years. Currently two production lines are in place for making bronze and plastic sprinklers. Three types of sprinklers are available in both bronze and plastic: 90-degree nozzle sprinklers, 180-degree nozzle sprinklers, and 360-degree nozzle sprinklers. Management has forecast demand for the next four years as follows:

	Yearly Demand
	1 (in 000s)	2 (in 000s)	3 (in 000s)	4 (in 000s)
Plastic 90	32	44	55	56
Plastic 180	20	25	30	25
Plastic 360	60	65	74	77
Bronze 90	13	10	5	10
Bronze 180	6	5	6	9
Bronze 360	10	16	17	20

Both production lines can produce all the different types of nozzles. The bronze machines needed for the bronze sprinklers require two operators and can produce up to 12,000 sprinklers. The plastic injection molding machine needed for the plastic sprinklers requires four operators and can produce up to 200,000 sprinklers. Three bronze machines and only one injection molding machine are available. What are the capacity requirements for the next four years? (Assume that there is no learning.)

Problem 2:

A book publisher has fixed costs of $200,000 and variable costs per book of $5.00. The book sells for $25.00 per copy.

a. How many books must be sold to break even?

b. If the variable cost per unit decreased, would the new break-even point be higher or lower?

c. If the fixed cost increased, would the new break-even point be higher or lower?

Problem 3:

A manufacturing process has a fixed cost of $100,000 per month. Each unit of product being produced contains $25 worth of material and takes $45 of labor. How many units are needed to break even if each completed unit has a value of $120?