Problem one You are a manager at Glass Inc. a mirror and window supplier. Recently, you conducted a study of the production process for your single-side encapsulated window. The results from the study are summarized below and are based on the eight units of capital currently available at your plant. Workers are paid $60 per unit, per unit capital costs are $20, and your encapsulated windows sell for $12 each. Given this information, optimize your human resource and production decisions. Do you anticipate earning a profit or loss? Explain carefully.
| Labor | Output |
| 0 | 0 |
| 1 | 10 |
| 2 | 30 |
| 3 | 60 |
| 4 | 80 |
| 5 | 90 |
| 6 | 95 |
| 7 | 95 |
| 8 | 90 |
| 9 | 80 |
| 10 | 60 |
| 11 | 30 |
Problem two
You are the general manager of a firm that manufactures personal computers. Due to a soft economy, demand for PCs has dropped 50 percent from the previous year. The sales manager of your company has identified only one potential client, who has received several quotes for 10,000 new PCs. According to the sales manager, the client is willing to pay $800 each for 10,000 new PCs. Your production line is currently idle, so you can easily produce the 10,000 units. The accounting department has provided you with the following information about the unit (or average) cost of producing three potential quantities of PCs:
| 10,000 PCs | 15,000 PCs | 20,000 PCs | |
| Materials (PC component) | $600 | $600 | $600 |
| Depreciation | 300 | 225 | 150 |
| Labor | 150 | 150 | 150 |
| Total Unit Cost | $1,050 | $975 | $900 |
Based on this information, should you accept the offer to produce 10,000 PCs at $800 each? Explain.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
