Note: To sepcify annual Q range, use 1234

Marketing
20th Edition
ISBN:9780357033791
Author:Pride, William M
Publisher:Pride, William M
Chapter19: Pricing Concepts
Section: Chapter Questions
Problem 6DRQ
icon
Related questions
Question
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 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 giant
retail WalWal. The producer is not certain as what capacity production is to produce. It all depends on WalWal's contract. The producer has also been
informed, 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 and
select the best production process to set up for manufacturing.
Ann. Fixed Cost $
variable cost $/unit
Process 1
6,125
0.68
Note: To sepcify annual Q range, use 1234 <Q <= 5678.
Questions:
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
Process 2
c) The range of annual volume for which Process 3 is best to use is: Blank 3
9,878
0.54
The producer wants you to help them to identify at what range of production Q (quantity) is Best to adopt Process 1, Process 2, and Process 3.
Process 3.
3,871
1.18
Transcribed Image Text: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 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 giant retail WalWal. The producer is not certain as what capacity production is to produce. It all depends on WalWal's contract. The producer has also been informed, 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 and select the best production process to set up for manufacturing. Ann. Fixed Cost $ variable cost $/unit Process 1 6,125 0.68 Note: To sepcify annual Q range, use 1234 <Q <= 5678. Questions: 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 Process 2 c) The range of annual volume for which Process 3 is best to use is: Blank 3 9,878 0.54 The producer wants you to help them to identify at what range of production Q (quantity) is Best to adopt Process 1, Process 2, and Process 3. Process 3. 3,871 1.18
Expert Solution
steps

Step by step

Solved in 3 steps with 10 images

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Marketing
Marketing
Marketing
ISBN:
9780357033791
Author:
Pride, William M
Publisher:
South Western Educational Publishing
Practical Management Science
Practical Management Science
Operations Management
ISBN:
9781337406659
Author:
WINSTON, Wayne L.
Publisher:
Cengage,