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1415 F Sample Problems 1 Essay

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SAMPLE'PROBLEMS'
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ERP:'

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Performance'Measurement:'
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18 A'manufacturing'firm'is'considering'whether'to'produce'or'outsource'the' production'of'a'new'product.'If'they'produce'the'item'themselves,'they' will'incur'a'fixed'cost'of'$950,000'per'year,'but'if'they'outsource'overseas' there'will'be'a'$1.5'million'cost'per'year.'The'advantage'of'outsourcing' overseas'is'the'variable'cost'of'95¢'per'unit,'which'is'a'fraction'of'their' $43/unit'cost'in'their'own'union'shop.'Regardless'where'these'devices' are'made,'they'will'sell'for'$98'each.'What'is'the'break8even'quantity'for' each'alternative?'Solve'this'problem'graphically'and'algebraically.' '

28 A'new'minor'league'baseball'team'is'coming'to'town'and'the'owners'have' decided'to'build'a'new'stadium,'either'small'or'large.'The'success'of'the' team'with'regard'to'ticket'sales'will'be'either'high'or'low'with' probabilities'of'0.75'and'0.25,'respectively.'If'demand'for'tickets'is'high,' the'large'stadium'would'provide'a'payoff'of'approximately'$20'million.'If' ticket'sales'are'low,'the'loss'on'the'large'stadium'would'be'$5'million.'If'a' small'stadium'is'constructed,'and'ticket'sales'are'low,'the'payoff'is' $500,000'after'deducting'the'cost'of'construction.'If'ticket'sales'are'high,' the'team'can'choose'to'build'an'upper'deck,'or'to'maintain'the'existing' facility.'Expanding'the'stad...

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