Production and Operations Management Essay

1716 Words Apr 29th, 2013 7 Pages
Production & Operations Management–Homework 1 for Section 4
Due Tuesday October 16, 2012 1.1 Eastman publishing Company is considering publishing a paperback textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and production setup is estimated to be $80,000. Variable production and material costs are estimated to be $3 per book. Demand over the life of the book is estimated to be 4,000 copies. The publisher plans to sell the text to college and university bookstores for $20 each. a. What is the breakeven point? b. What profit or loss can be anticipated with a demand of 4,000 copies? c. With a demand of 4,000 copies, what is the minimum price per copy that the publisher must charge to
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The raw material costs are $10 for each bookshelf model and $12 for each floor model. Labor costs are $22 per hour. Greenville has up to 3,400 hours of production time available each month. If production for either cabinet exceeds demand in month 1, the cabinets can be stored at a cost of $5 per cabinet. Formulate the problem to determine the numbers of units 3

that should be manufactured each month to minimize total production and storage costs. 1.7 EZ-Windows, Inc. manufacturers replacement windows for the home remodeling business. In January, the company produces 15,000 windows and ended the month with 9,000 windows in inventory. EZ-Windows’ management team would like to develop a production schedule for the next three moths. A smooth production schedule is obviously desirable because it maintains the current workforce and provides a similar month-to-month operation. However, given the sales forecasts, the production capacities, and the storage capabilities as shown in Table 3, the management team does not think a smooth production schedule with the same production quantity each month possible.

Table 3: Problem 1.7 February March April Sales forecast 15,000 16,500 20,000 Production capacity 14,000 14,000 18,000 Storage capacity 6,000 6,000 6,000

The company’s cost accounting department estimates that increasing production by one window from one month to the next will increase total costs by $1.00 for each unit increase in the production level. In addition,

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