# Operations Management

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Operations Management

## Second Quiz

Answer all three of the following Roman Numeral Questions (I, II, III).  Equal credit.

1. The Ready lite Company produces a flashlight in which product managers are trying to decide how long a warranty to issue.

If the managers believe the life of the flashlight follows a normal distribution with a mean of 3.5 years and a standard deviation of 1.50 years):

Mean = 3.5

Sdtev =1.50

Z = (x – mu)/stdev

1. What percentage of flashlights sold can they anticipate will be returned within the first one and one-halfyears?

X=

1. What percentage of flashlights sold can they anticipate will be returned within two and one-half years?
2. What percentage of flashlights sold can they anticipate will be returned between the first one and one-half and three and one-half years?

1. Suppose a company has a design maximum output of 280. Its actual output is 195 and its efficiency is 80%.  Calculate its effective output and its capacity utilization.

III.  Suppose a company has a fixed cost of \$140,000 and a variable cost per unit of \$9.  It sells its product for \$14.

1. Calculate its break-even level of output.
2. Calculate how much it must produce to make \$145,000, assuming it can sell it all.

Extra credit – 15 points.  If it can outsource, and buy the product wholesale from a distributor at \$11 each, over what level of output should it buy from the wholesaler, and over what level should it produce on its own?

Last Updated on February 11, 2019