4. Analysis and Making Production Decisions

You have now provided your company's management with powerful tools that model the cost of production in the three factories. (Omaha, Seattle or Wichita). When you get an order for a certain number of units, you can be informed of the cost that would be incurred by each factory if chosen to fulfill the order. In reality, the decision must also consider many other factors, but in our scenario, we want to fill our orders at the lowest average cost per unit. Consider each of the following questions as a separate, unrelated day of business.

a. On Monday, you have a single request: Order A for 15,000 units. It must be fulfilled by a single factory. To which factory do you sent the order? Explain your decision. Support your argument with no numbers.

b. On Tuesday, you have two orders. You may sent each order to a separate factory OR both to the same factory. If they are both sent to be fulfilled by a single factory, you must use the total of the two orders to find that factory's cost per unit for production on this day. Remember that the goal is to end the day with the lowest cost per unit to produce the company's products. Order B is 7,000 units and Order C is 30,000 units.

* First, consider giving the orders to separate factories. Use these values and the following formula to calculate the average weight cost per unit.

_(cost per unit B)(#of units) + (cost per unit C)(# of units)_
_
Total # of Units

* Second, consider sending both orders to a single factory that has the lowest cost per unit to produce 37,000 units.

* Compare the two options. Decide how you will sent the orders out, and document your decision by completing the daily production below. ​

a. on monday, you have a single request: order a for 15,000 units. it must be fulfilled by a single

factory. to which factory do you send the order? explain your decision. support your argument

with numbers.

b. on tuesday, you have two orders. you may send each order to a separate factory or both to the

same factory. if they are both sent to be fulfilled by a single factory, you must use the total of

6a. For this subitem we are tasked to compare the cost per unit if we were to send two orders to a combination of any two factories. We will just find the cost per unit for every combination and show the average weighted cost by following the given formula.

Combination 1

Wichita: 7,000 units = $1

Seattle: 30,000 units = $0.68

Average Cost: $0.74

Combination 2

Wichita: 7,000 units = $1

Omaha: 30,000 units = $0.67

Average Cost: $0.73

Combination 3

Seattle: 7,000 units = $0.35

Omaha: 30,000 units = $0.67

Average Cost: $0.61

Combination 4

Omaha: 7,000 units = $0.85

Seattle: 30,000 units = $0.68

Average Cost: $0.71

Combination 5

Omaha: 7,000 units = $0.85

Wichita: 30,000 units = $0.80

Average Cost: $0.81

Combination 6

Seattle: 7,000 units = $0.35

Wichita: 30,000 units = $0.80

Average Cost: $0.71

6b. For this subitem we need to give all 37,000 units to one factory. We just need to calculate the cost per unit for every function. The calculation for the three factories is shown below (except when no calculation is needed, only inspection of the graph or function):

Wichita: not defined

Seattle:

Omaha:

6c. For this item, we will review our answers for the two previous subitems and select the one with the lowest cost per unit. Upon examining, we can see that letting Omaha produce all 37,000 units will yield the lowest cost.

ANSWER: Orders B and C should be produced by Omaha's factory.

Total # of units produced for the company today: 37,000

Average cost per unit for all production today: $0.60

Step-by-step explanation:

ok

step-by-step explanation: