Expand both work centers x and y at the end of the year 0

Assignment Help Operation Management
Reference no: EM13500701

The B. Sharp Company has a rapidly growing product line that requires going through two work centers, X and Y to manufacture. Work Center X has a current capacity of 50,000 units per year, and Work Center Y is capable of 55,000 units per year, so X is the bottleneck right now. This year (Year 0), sales of the product line are expected to reach 50,000 units. Average growth is projected by the marketing manager (M) at an additional 2,000 units each year through year 5. Pre-tax profits are expected to be $60 per unit throughout the 5 year planning period. Two alternatives are being considered:

a) Expand both Work Centers X and Y at the end of the year 0 to a capacity of 60,000 units per year, at a total cost for both Work Centers of $600,000.

b) Expand Work Center X at the end of year 0 to 55,000 units per year, matching Work Center Y, at a cost of $450.000; then expand both Work Centers (if necessary) to 60,000 units per year at the end of year 2 (if demand then justifies it), at an additional cost at that time of $400,000. The Sharp Company will not consider projects that don't show a 5 year positive net present value using a discount rate of 20%.

What is the pre-tax cash flow (net present value) for alternative #1 compared to the base case of doing nothing for the next 5 year?

Reference no: EM13500701

Questions Cloud

What is meant by the term substance over form : Petunia Ltd purchased 75% of the shares of Lavender Ltd for a cash payment a number of years ago, when the retained earnings of Lavender Ltd were €200,000, and the share capital of Lavender Ltd was €100,000.
Total quality management : Total Quality Management
Formulate a linear programming model for problem : Formulate a linear programming model for problem. Define decision variables, and then define your constraints and objective function accordingly. Combine everything to get the final model.
Evaluate the ph of each of the solutions : Calculate the pH of each of the following solutions containing two solutes in the concentrations indicated. (a) 0.50 M HOAc (acetic acid), 0.5 M NaOAc (sodium acetate); Ka = 1.8 x 10-5
Expand both work centers x and y at the end of the year 0 : Expand both Work Centers X and Y at the end of the year 0 to a capacity of 60,000 units per year, at a total cost for both Work Centers of $600,000.
Describe the appropriate treatment for the loan interest : What cost figure should be used as the basis for the depreciation charge for the year on the machine purchased in (1)?  Show your workings and explain your answer.
Explain the hydrogen peroxide unknown into a clean : A student poured the hydrogen peroxide unknown into a clean, wet erlenmeyer flask. The stdent thought that as long as the flask was clean, this preactice would not lead to an error in the results. Briefly explain.
What volume of fluid is displaced by the box : A 70 m3 incompressible box is completely submerged in a fluid. What volume of fluid is displaced by the box if the fluid is air? The density of air is 1.2 kg/m3
List the major concepts within the article : List the major concepts within the article

Reviews

Write a Review

Operation Management Questions & Answers

  Book review - the goal

Operations Management is about a book review. Title of the book is "Goal". This book has been written by Dr. Eliyahu Goldartt. The book has been appreciated by many as one of those books which offers an insight into the operations and strategic capac..

  Operational plan in hospitality enterprise

Operational plan pertaining to a hospitality enterprise is given in detail in the solution. The operational plan is an important plan or preparation which gives guidelines regarding the role and responsibilities of each and every operation at all lev..

  Managing operations and information

Recognise the importance of a strategic approach to the development and deployment of organisational information systems. Demonstrate an understanding of the importance of databases and their integration to the organisation's overall information mana..

  A make-or-buy analysis

An analysis of the holding costs, including the appropriate annual holding cost rate.

  Evolution and contributor of operations management

Briefly explain Evolution and contributor of Operations management.

  Functions and responsibilities of an operations manager

A number of drivers of change have transformed the roles, functions and responsibilities of an operations manager over recent years. These drivers have not only been based on technological innovations but also on the need for organisations to develop..

  Compute the optimal order quantity

Compute the Optimal Order quantity of DVD players. Determine the appropriate reorder point.

  Relationship to operations practice in the organisation

Evaluate problems in operations and identify approaches to overcoming them. Critically evaluate operating plans and identify areas for improvement. Justify, implement and evaluate changes to operations in line with modern approaches.

  A make or buy analysis

Develop a report for Figi Fabricating that will address the question of whether the company should continue to purchase the part from the supplier or begin to produce the part itself.

  Prepare a staffing plan

Prepare a staffing plan showing the change of your unit from medical/surgical staffing to oncology staffing.

  Leadership styles in different organizations

Ccompare the effectiveness of different leadership styles in different organizations

  Risk management tools and models

Be able to understand the concept of risk, roles and responsibilities for risk management and risk management tools and models.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd