# Organizational Management

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Chapter 2

Problem 6

Q= FCm = \$45,000 = 2,250

VCb-VCm \$160-\$140

The break-even quantity is 2,250.

Problem 7

a. The firm should make the part in-house.

b. Q= FCm = \$45,000 = 4,500

VCb-VCm \$150-\$140

Yes, the company should accept the offer.

c. Q= FCm

VCb-VCm

1,500=\$45,000/(VCb-\$140)

VCb=\$170

The maximum price per part the manufacturer should be willing to pay to the supplier if the forecast is 1,500 parts would be \$170.

Chapter 3

Problem 2

New-Old X 100% = 10,608/26-8,335/21 X 100% = 2.77%

Old 8,335/21

Productivity has improved by 2.77%. The recent changes have helped the airline increase revenue by adding more flights and serving more customers.

Problem 4

a. Productivity = Output = 40,000 hamburgers x 52 weeks = 215.16 units/dollor of inputs

Input \$5,000/3 years + \$8,000

b. \$10,000/5 years = \$2,000/year \$2,000/year < \$4,000/year

Yes, we should consider purchasing this equipment. Since the cost of using this equipment per year is \$2,000 and the cost of labor that we pay more without using this equipment is \$4,000 per year, we actually save \$2,000 per year by purchasing this equipment.

Chapter 16

9. Suppose that a specification calls for LTL=2.0 and UTL=6.0. A sample of 100 parts found µ=4.5 and σ=0.5. Compute Cp, Cpl, Cpu, and Cpk. Should the manager consider any action based on these results?

Cp= (UTL-LTL) = (6.0-2.0) = 4 = 1.33

6σ 6 x 0.5 3

Cpl= (µ-LTL) = (4.5-2.0) = 2.5 = 1.67

3σ 3 x 0.5 1.5

Cpu= (UTL-µ) = (6.0-4.5) = 1.5 = 1

3σ 3 x 0.5 1.5

Cpk= Min (Cpl, Cpu) = Min (1.67, 1) = 1

From the data above we can see, because of the values of Cp exceeding 1, it indicates good capability. Cpu=1 indicates that the process is capable of meeting the upper specification. Cpk is the "worst case" and provides an indication of whether both the lower and upper specifications can be met regardless of where the process is centered. This is the value that most managers pay attention to. So, Cpk=1, we will say it is good, but not good enough.

Chapter 11

2. Forecasts and actual sales of portable MP3 players at Just Say Music are as follows:

Month Forecast Actual Sales

March 150 170

April 220 229

May 205 192

June 256 241

July 250 238

August 260 210

September 270 225

October 280 179

a. Plot the data and provide insights about the time series.

b. What

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