Calculate expected profit for batch production quantities

Assignment Help Operation Management

Reference no: EM131225610

A job shop has received an order for high-precision formed parts. The cost of producing each part is estimated to be $65,000. The customer requires that either 8, 9, or 10 error-free parts be supplied. Each good part sold will produce revenue of $100,000. If fewer than 8 good parts are produced, none will be purchased. If more INEG 4543 HS-1 Fall 2016 than 10 good parts are produced, the excess will not be purchased. The probability of an individual part being acceptable equals 0.85. a) Calculate the expected profit for batch production quantities of 8, 9, 10, 11, and 12. What is the optimum batch production quantity if the objective is to maximize expected profit? b) Calculate the probability of losing money for batch production quantities of 8, 9, 10, 11, and 12. What is the optimum batch production quantity if the objective is to minimize the probability of losing money?

Reference no: EM131225610

Questions Cloud

Ethically defensible to otsource production to producers : Under what conditions is it ethically defensible to otsource production to producers in the developing world who have much lower labor costs when such actions involve laying off long term employees in the firm's home country? Provide an example

Doctor on doctor assault and battery : You are the hospital administrator in charge of Suburban Medical Center’s (SMC) surgical practice. You have received a complaint from Dr. Singh stating he was hit on the head by Dr. Shaw with a stack of papers causing severe pain, headaches, and ring..

Best alternative to negotiatied agreement : Editing due to comment: BATNA (Best Alternative To Negotiatied Agreement) looking at the strike and how the players were paid we need to analyize their choice. The main question here is with higher attendance in the end and no pay during spring train..

Calculate expected profit for batch production quantities : A job shop has received an order for high-precision formed parts. The cost of producing each part is estimated to be $65,000. The customer requires that either 8, 9, or 10 error-free parts be supplied. Each good part sold will produce revenue of $100..

Calculate the productivity increase for both options : You are the workforce scheduler at your company, and you have been asked to consider two increases in workforce. The first option is a 10% increase in workforce of the marketing department, and you are estimating that it will result 30% increase in y..

Similar impact on the way society interacts : As we have been discussing, the printing press played a huge role in the advancement of the Protestant Reformation, changing forever the way people communicate. To deepen our understanding of this topic, can you think of any other technologies that h..

Optimization model with number of resource constraints : Suppose you use Solver to find the optimal solution to a maximization model. Then you remember that you omitted an important constraint. After adding the constraint and running Solver again: Consider an optimization model with a number of resource co..

Transferring strategic plan into a reality : Transferring strategic plan into a reality can take more than planning. Provide an example of a leader who has transformed strategic plan into a reality. How did they innovate and lead the company? What can you learn from this person??

User Account

All Pages