A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being consideredwill have the following cost structures as shown in the table. The producer knows there is a big order or order contract that will be awarded by the giantretail WalWal. The producer is not certain as what capacity production is to produce. It all depends on WalWal's contract. The producer has also beeninformed, the first batch of pottery is required to ship in a very tight time frame from the first production run. The producer decides to plan ahead andselect the best production process to set up for manufacturing.Process 1Ann. Fixed Cost $7,017variable cost $/unit1.05Process 29,0350.78Process 314,2510.63The producer wants you to help them to identify at what range of production quantity (Q) for Process 1, Process 2, and Process 3 is best to adopt.Enter Q range with whole number and use signs such as <= and >= to describe greater or less than equal to. Ex. 1234 < Q <= 5678a) The range of annual Q for which Process 1 is best to use is: Blank 1b) The range of annual volume for which Process 2 is best to use is: Blank 2c) The range of annual volume for which Process 3 is best to use is: Blank 3

Here, I have annual fixed costs and variable costs per unit for each process. I need to figure out…

Answered: a) The range of annual Q for which…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter9: Decision Making Under Uncertainty

Section: Chapter Questions

Problem 30P

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A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $11,152 per month and variable costs of $1.23 per unit produced. Each item is sold to retailers at a price that averages $2.07 The volume is needed to provide revenue of $23,000 per month = ( ) (in whole number)
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a) The range of annual Q for which Process 1 is best to use is: Blank 1 b) The range of annual volume for which Process 2 is best to use is: Blank 2 c) The range of annual volume for which Process 3 is best to use is: Blank 3