Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Operation Management Expert

problem: A soft drink maker wishes to expand to a neighboring country. They want the product bottled in that country to evade political issues and to improve the local image of the product. They have recognized two options for the growth. The first is to build a highly automated plant. The economies of scale would permit them to generate a can of soda for $0.04 and the distribution costs would be $0.02 per can. This facility would cost $1 million per year in fixed costs. The second option would be to make a semi-automated plant which would cost $650,000 per year in fixed costs. Though, the cost to generate a can would be $0.07 and the distribution cost would be $0.04 per can.

a) Over what range of product would each plant be favored?

b) Assume that the company believes that the demand would be 6,000,000 cans per year. Assume that all costs except the variable cost (sum of the production and distribution costs) for the highly automated method are certain and can’t change. What would the variable cost (the sum of production and distribution cost) per can for the highly automated method encompass to be so that the soft drinker maker is indifferent among the two types of plants?

c) Now assume that each alternative has a different capacity. Total estimated demand for the year is 5,300,000 if the company sells each can for $0.32. Though, only the highly automated method can produce and distribute this amount. When the semi-automated process is employed, the company would only be capable to produce and distribute 4,200,000 cans yearly. To offset the lower volume, the company will raise the price of each can to $0.35. It will be capable to sell all it produces at this price. By using all of the information presented in the problem, which method should it use? describe why?

Operation Management, Management Studies

  • Category:- Operation Management
  • Reference No.:- M99869

Have any Question? 


Related Questions in Operation Management

1 there are many current issues in the field of hr

1. There are many current issues in the field of HR including: Drug testing, Honesty testing, Whistle blowing, Employee monitoring/workplace security, legislating love, and sexual orientation rights. Choose any two of th ...

Which of your current beliefs choose one or two around

Which of your current beliefs (choose one or two) around Management do you wish could change (describe it) and why? Identify one or two beliefs your organization has (that may be different from your own) about Management ...

For singapore corporate tax the investment allowance

For Singapore Corporate tax, the Investment allowance granted in the scenario below, would it be based on the qualifying expenditure capped of $5,000,000 or the approved fixed capital expenditure? In addition, would PIC ...

Questionreview material for ilo ansi-z-10 and csa standards

Question: Review material for ILO, ANSI-Z-10 and CSA standards (or from OSHA''s VPP related materials). This assignment is to get you thinking about the gap analysis that you will prepare in the next assignment. Based on ...

Restoration hardware sells antique-design hardware and

Restoration Hardware sells antique-design hardware and fixtures from 94 retail stores in malls around the country. Each store currently orders and holds its own inventory directly from approved suppliers. The company is ...

Quality management and lean systems paperin the modern

Quality Management and Lean Systems Paper In the modern world, businesses and individuals need to optimize their efforts to gain effectiveness and efficiency. Also, concepts of sustainability, continuous improvement, and ...

Your intern is confused about the difference between

Your intern is confused about the difference between physical and logical system models. Explain the difference between the two models to her and give at least one example for each of the two models.

Please give a practical example each of contract of

Please give a practical example each of Contract of Indemnity and Contract of Guarantee. Also identify and highlight as to how these contracts, as quoted by you as examples, are different from each other. Need min of 100 ...

Please help with the following questionnbsp will need a

Please help with the following question.  Will need a reference also. Name the five types of customer-introduced variability and discuss options that let companies offer a high level of accommodation at low cost or reduc ...

1 is marketing really a universal concept defend your

1. Is marketing really a universal concept? Defend your reasoning. 2. How does the Bill of Rights, mainly the 1st Amendment both limit and protect business in general? 3. What are the characteristics of effective project ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen