Exam 1: Introduction to Management Science, Modeling, and Excel Spreadsheets

Risks of model building include

All other things remaining the same, if the variable cost goes up by $\$ 0.10$ per unit, and fixed cost is $\$ 1000.00$ , the breakeven volume will

A gas refinery is offered new add-on equipment for cleaning the smoke stack. The leasing cost of the equipment is $\$ 200,000$ per year. The addition reduces the variable cost by $\$ 0.02$ per gallon of gas. The selling price of gas is $\$ 2.00$ per gallon; other variable costs are $\$ 1.10$ per gallon. (A) What is the minimum volume of production per year that will justify the lease of the equipment? (B) If the expected volumes for the next 3 years are: 8,000,000, 14,000,000 and 20,000,000, will it be worth leasing the equipment for three years? (Assuming that it has to be leased for all three years or not leased at all)

Decision support system is $a / n$

A one-machine shop producing bolts has a fixed cost of $\$ 2,000.00$ and a variable cost of $\$ 2.00$ per bolt. The selling price is $\$ 6.00$ per unit. The total revenue corresponding to the breakeven volume of production is

Two of the steps in the management science approach to problem solving are

A one-person automobile oil change in rural Mississippi has a fixed overhead of $\$ 900.00$ per month. The variable cost per oil change $\$ 10.00$ . The charge is $\$ 30.00$ for one oil change. If the owner/worker Joe Smith desires to have a contribution per month of $\$ 2,100.00$ , the number of oil changes he should do per month is

Risks of model building include

You are trying to lease a gasoline-powered car or a hybrid car based on cost considerations during the next 5 years that you plan to keep it. You plan to drive 12,000 miles per year. Ignore the effect of interest rates and time value of money. Leasing cost is $\$ 250$ per month for the gas-powered car and \$375 per month for the hybrid. Down payment is $\$ 0$ for both cars. 12,000 leasing miles are allowed per year for each car. Per mile charge for gas-powered cars is $\$ 0.15$ and $\$ 0.05$ for hybrids. Which would be a better buy, from a cost minimization point of view?

Kathy Smith works for a cell phone company. She is paid $\$ 3.00$ per hour (note that commission sales personnel may be paid less than the minimum wage) plus a commission of $\$ 20.00$ per phone sold. Kathy works for 40 hours a week. The company sells the phones for $\$ 100$ a phone and buys it for $\$ 40.00$ per phone. The company hopes to sell anywhere from 10 to 60 phones per week. From the company's point of view, considering Kathy's wages and phone costs as the only expenses related to cell phone, the total costs for a sales level of 50 phones is

All other things remaining the same, if the variable cost per unit increases by $10 \%$ then the breakeven volume of production will

Quantitative approach to problem solving will be appropriate when the problem

A one-person automobile oil change in rural Mississippi has a fixed overhead of $\$ 900.00$ per month. The variable cost per oil change is $\$ 10.00$ . The charge is $\$ 30.00$ for one oil change. The breakeven number of oil changes per month is