Problem 1 Provider JCN Bell Comtron Choose? No. of problems 50 100 250 MTBF (hours) Mean Time to Reach Customer Mean Time to Fix Problem 3 2 1 2 1 0.5 System Availability Problem
2 a. Fixed cost Variable cost Revenue $5,000 $15 $50 Breakeven pt.
b. Old process New process Fixed Cost $25,000 $5,000 Variable Cost $10 $15 Pt of Indifference For what volume of demand should Patricia choose this process?
Problem 3 $12 Input: Label each process and input its fixed and variable cost. $10 Process Make Buy Fixed Cost $200 $75 Make Buy $8 Variable Cost $0.30 $6 $1.13 none $4 Output: $2 Pairwise Comparison Make Buy Point of $0 Indifference Unit s Graph:
Volume Recommendation: Make Buy Choose the process with the lowest cost above and below the points of indifference. Use the graph to help visualize which process to choose at what levels of demand.