Assignment 3

Course: MGT 314

Section: 1
Date: 12/03/2015

Submitted to:
Dr. Kais Zaman
Associate Professor
Submitted by:

Name

ID

Asif Imran Khan

1120001030

1.

Utilization=

actual output
design capacity

Efficiency=

actual output
effective capacity

a. Actual output = 7
Design capacity = 10
Effective capacity = 8
Utilization = 7/10= 70%
Efficiency = 7/8 = 87.5%
b. Actual output = 4
Design capacity = 6
Effective capacity = 5
Utilization = 4/6=67%
Efficiency = 4/5 = 80%
c. No. Because efficiency is measured upon effective output. Now if
effective capacity is considerably lower than design capacity then
efficiency would not be a good indicator.
2. Effective capacity = 50% of design capacity
Actual output = 8
actual output
actual output
Utilization=
Efficiency=
design capacity
effective capacity
Let design capacity be x.
Therefore, effective capacity = 0.5x
Actual output = 80% of 0.5x = 0.4x
0.4x=4
Or x=20
So, design capacity needed is 20 jobs per hr.

4.

Machine A
FC
40000
v
10/unit
Revenue =15/unit

Machine B
30000
11/unit

a. BEPA=FC/(R-v) = 40000/(15-10)=8000 units

BEPB= 30000/(15-11)=7500 units
b. ProfitA =ProfitB
15x-40000-10x=15x-30000-11x
or 5x-40000=4x-30000
or x=10000

At 10000 units of sale, both A and B produce same profit.

c. ProfitA=15*12000-40000-10*12000 =20000
ProfitB=15*12000-30000-11*12000=18000
Since A is more profitable, choose machine A.
9. Design capacity =250
effective capacity = 230
actual capacitypresent= 200
actual capacityfuture= 225
annual demand = 50000
after 5 yrs demand = 150000
workdays per yr =240
Predicted actual output per cell=225*240=54000 units/yr
predicted demand=50000*3=150000/yr
No. of, cells needed = 150000/54000=3
10. a.
Fixed cost
Annual work
limit in hours
Total hours
needed to meet
total demand
No. of machines
needed
Per hour cost

Machine A
40000
2500

Machine B
30000
2500

Machine C
80000
2500

3100

3467

2034

(40000*2)/2500=
32

(30000*2)/2500=
24

80000/2500=32

So choose machine B, since it has total per hour cost of $24.

b.
FC
V
Hours
neede
d
Max
run
time

Machine A
$40000
$10
3100

Machine B
$30000
$11
3467

Machine C
$80000
$12
2034

2500

2500

2500

TC
No. of
machi
nes
neede
d
TC

2500*10+40000=$6
5000/machine
2

2500*11+30000=$57
500/machine
2

2034*12+80000=$104
408/machine
1

3100*10+80000=$1
11000

3467*11+60000=$98
137

2034*12+80000=$104
408

Choose machine B, since it has lowest total cost of $98137/year.

Case Study: How to calculate seating capacity of a restaurant?
A restaurant could offer all three meals of the day including breakfast,
lunch and dinner or any two of those or any one of those. Based on the
location of the restaurant and the average number of customers, we could
calculate the seating capacity. Capacity here would be the number of
customers seated and/or served here: some customers could simply pick
up a parcel. If there is much load during breakfast time, the management
would have to arrange for more seating and staff to attend the customers,
number of chefs could be increased too with additional kitchen capacity.
This could be the scenario in other times as well. But in times of lesser
demand the excess chefs/staffs should be removed. It could be that extra
manpower is hired on a part-time basis, while some are on fulltime basis.
Such scenario could also be seen in particular seasons in tourist
attractions.