Question

1. You are the manager of a shoe factory. The owners would like to introduce a new shoe style to the collection. The projected cost to set up the land and plants is $110,000. The cost to produce each pair of shoes is $25. The shoes will sell for $35 per pair.

a. Write an algebraic formula to show the profit (loss) in terms of Q (quantity of pairs of shoes produced)

b. How many pairs of shoes does the company need to produce to break even? Solve using the formula in part a.

c. The marketing team believes that the company can sell 7,000 pairs of shoes. Will the company make a profit? If so, how much? If you were the manager, would you decide to take on this project given the costs versus the projected profit?

b. Create a new tab on the spreadsheet and solve the following M/G/1 queuing problem. I know the answer for Q1, can you explain what should I put for standard deviation? and finish Q2.

Given:

Lambda = 2.4

1/mu = .387

Sigma = .5

Solve for:

L

Lq

W

Wq

Rho

P0

Answer 1

In given problem comapny set a project which cost is $110000 Cost of per shoes is %25 and Selling price is $35 so answer is as below

a) Profit formula:-

Profit= Selling price per shoes - cost price per shoes

b) Number of pairs to produced to achive break even point

Break Even Point= fixed cost of plant/ contribution per shoes

=$110000/(35-25)

= 11000 shoes needs to produced to achive breakeven point

c) If company sell 7000 shoes than profit is

= Number of pairs sold*( selling price per shoes - cost per shoes)- fixed cost

= 7000*(35-25)- $ 110000

Loss= $40000