Purchase Solution

Operations Management :Capacity Planning

Not what you're looking for?

Ask Custom Question

A shop wants to increase capacity by adding a new machine. The firm is considering proposals from vendors A and B. The fixed costs for machine A are $90,000 and for machine B, $75,000. The variable cost for A is $15 per unit and for B $18 per unit. The revenue generated by the units processed on these machines is $22 unit. If the estimated output is 9,000 units which machine should be purchased?

Purchase this Solution
Solution Summary

The solution explains which machine should be purchased to maximize the profit at given level of output.

Solution Preview

Problem description: Choose the machine which provides maximum net profit.
Problem elements: Fixed of purchasing a machine is given along with operating (variable) cost. Per unit revenue is also given, therefore net profit for 9000 units of products can be computed.

Methodology to choose a machine:
Step 1: Compute net profit which is given ...

Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance

This quiz test introductory finance topics.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Employee Orientation

Test your knowledge of employee orientation with this fun and informative quiz. This quiz is meant for beginner and advanced students as well as professionals already working in the HR field.

Motivation

This tests some key elements of major motivation theories.

Change and Resistance within Organizations

This quiz intended to help students understand change and resistance in organizations

View More Free Quizzes
Related BrainMass Solutions

  • cost benefit analysis

    Explain the concepts of forecasting, system design, capacity planning, quality management and control, supply chain management, inventory management and scheduling, and project management and how they each relate to form an integrated view of production

  • Role of Operations Management

    223144 Key resources: capacity planning in goods and service industries; product acceptance DQ -1 Compare and contrast the role of operations management in both the goods/materials industry and in service-related industry.

  • Discussion about: Inventory turnover, purchasing, cyclical sales, A/R collections, projected cash flows

    Reference: Operations Management by Gathier Financial Management by IM Pandey Your response is 722 words plus two references.

  • Supply Chain

    Capacity planning can have different meanings to individuals at different levels within the operations management hierarchy. Can you explain what some of those differences might be? 3.

  • Capacity Constraints

    Other uses of forecasts for capacity planning Forecasts could help a lot in capacity planning. It could provide bases of decision on how to address the physical constraints and is used in the overall capacity planning.

  • Common Elements of Four Operations Management

    484637 Common Elements of Four Operations Management Consider these questions: What are some common elements or aspects of the four operations management: producitivity, inventory, capacity, quality?

  • Responsible Operations Management

    Retrieved from http://managementhelp.org/blogs/nonprofit-capacity-building/2010/10/12/people-to-invite-to-your-non-profit-strategic-planning-session/ Responsible operations management for strategic planning is examined.

  • Select the best software packages for a manufacturing firm's

    493750 operations management software recommendation for manufacturing operations Select the best software packages for a manufacturing firm's materials requirements planning (MRP), capacity requirement planning (CRP), and enterprise resource planning

  • Different Aspects of Management

    Work standards are indeed the foundation of capacity and production planning, due to the fact that work standards dictate the rate at which products or services are produced by staff or machinery, which in turn determines the capacity of a given organization

  • WalMart's forecasting

    Master production schedule, bill of materials, distribution resource planning, capacity planning, material requirement planning, etc. are some of the systems of MRP that are used at Wal-Mart (Vollmann).

View More Related Solutions