First Practice: 30 seconds
Second Practice: 25.5 seconds
First Attempt: 240 seconds
Second Attempt: 180 seconds
$0.50
Capacity
Variable Cost
Per Unit of
*** Break-Even and Indifference Points ***
Break-Even
Point
10 Servers 20 Servers 30 Servers
10 Servers 101,011 — — —
20 Servers 181,087 20,000,000 — —
30 Servers 240,964 23,333,333 30,000,000 —
*** Results for Different Capacity/Demand Combinations ***
15 Million 30 Million 45 Million
Expected
Value
10 Servers $7,375,000 $9,850,000 $9,850,000 $9,107,500
20 Servers $7,365,000 $14,820,000 $19,790,000 $13,080,500
30 Servers $7,350,000 $14,820,000 $22,290,000 $13,326,000
a.)
Break-Even
c.)
15 Million 30 Million 45 Million Expected Value
NOTE: Enter Inputs in Yellow-Shaded Cells.
Revenue per unit of output:
Demand
First Job: 5 weeks
Second Job: 4 weeks
ong-Run Averages:
Arrival Rate: 11 calls per hour
Service Rate: 15 calls per hour
*** Per Job Estimates ***
Revenue: $2,000.00
Cost: Hours Per Hour Total
*** Demand Scenario Estimates ***
Demand
Scenario
Demand Level Probability
Total: 100%
*** Capacity Option Estimates ***
Part a)
Capacity
Option
Number of
Labor Hours
Number of
Equipment
Hours
Fixed Cost
Break-Even
Point
Max. Number
of Jobs
Handled
Part b)
*** Per Job Estimates ***
Revenue: $2,000.00
Cost: Hours Per Hour Total
*** Demand Scenario Estimates ***
Scenario
Demand
*** Capacity Option Estimates ***
Capacity
Option
Number of
Labor Hours
Number of
Equipment
Hours
Fixed Cost
Break-Even
Point
Max.
Number of
Jobs
Handled
*** Results for Different Capacity/Demand Combinations ***
High Demand Med. Demand Low Demand
Expected
Profit
High Capacity $204,000 $204,000 $204,000 $204,000
Med. Capacity $153,500 $153,500 $153,500 $153,500
Low Capacity $103,000 $103,000 $103,000 $103,000
NOTE: Enter Inputs in Yellow-Shaded Cells.
NOTE: Enter Inputs in Yellow-Shaded Cells.
Demand Level Probability Profit
Capacity
Option
Fixed Cost
Variable Cost
Per Unit of
Output
Max. Output
Demand
Scenario
Demand Level Probability
*** Break-Even and Indifference Points ***
Break-Even
Point
Option A Option B Option C
Option A 0.00 — — —
*** Results for Different Capacity/Demand Combinations ***
Low Medium High
Expected
Value
NOTE: Enter Inputs in Yellow-Shaded Cells.
Large Orders
T = 2 days
20%
Declined
4
6
Capacity
Option
Fixed Cost
Variable Cost
Per Unit of
Output
Max. Output
Demand
Demand Level
*** Break-Even and Indifference Points ***
Break-Even
Point
Indifference
Point
*** Results for Different Capacity/Demand Combinations ***
Low Medium High
Expected
Value
Question 1.)
NOTE: Enter Inputs in Yellow-Shaded Cells.
The two capacity options that Robbie needs to consider are buying vs. not buying a coffee roaster. The costs of not
Question 2.)
Question 3.)
Question 4.)
The worst possible financial outcome for Forster’s is that they decide to invest in the roaster and the demand is low.
Buy
Roaster?