Question: Reliant Electric Company has erected a large

> Del Norte Brick Co. is located near the intersection of Texas, New Mexico, and Mexico. Improved access to the company’s property is via a small bridge across the Rio Grande. The cost of the bridge was $770,000. Determine the depreciation and book value f

> (a) What is meant by half-year convention? (b) Where does it show up in the MACRS depreciation rate table? What is its effect?

> Halcrow Yolles purchased equipment for new highway construction in Manitoba, Canada, costing $500,000 Canadian. Estimated salvage at the end of the expected life of 5 years is $50,000. Various acceptable depreciation methods are being studied currently.

> Bristol-Myers-Squibb purchased a tablet-forming machine in 2010 for $750,000. The company planned to use the machine for 10 years and then sell it for $50,000; however, due to rapid obsolescence, it will be retired after only 6 years in 2016. (a) Determi

> Formulate the linear programming model, develop a spreadsheet, and solve the capital rationing problem in Example 12.1 with an investment limit of (a) $20 million, as presented, (b) $13 million, and (c) $30 million. Data from example 12.1:

> Air handling equipment that costs $12,000 has a life of 7 years with a $2000 salvage value. (a) Calculate the straight line depreciation charge for each year. (b) Write the spreadsheet function to determine the annual depreciation. (c) Determine the book

> Historically, The Travel Club has distributed advertising costs to its resort sites in Europe on the basis of the size of the resort budget. For this year, in round numbers, the budgets and allocation of $1 million advertising indirect costs are as follo

> The municipal water and desalinization utility in a California city currently allocates some costs for maintenance shop workers to pumping stations based on the number of pumps at each station. At the last Director’s Semiannual Meeting,

> CarryALL, Inc., makes and sells small cargo trailers to individuals and small businesses. Since its opening in 1990, it has allocated indirect costs (IDC) to its three manufacturing plants based on direct materials cost per unit. Each plant builds differ

> The Mechanical Components Division manager asks you to recommend a make/buy decision on a major automotive subassembly that is currently purchased externally for a total of $3.9 million this year. This cost is expected to continue rising at a rate of $30

> At Williams Corp., all indirect costs are allocated by accounting. One department manager obtained records for her department of allocation rates and actual charges for the prior 3 months and estimates for this and next month (May and June; see the table

> The Director of Street Maintenance wants to allocate his annual IDC budget of $1.2 million to the three divisions around the city. The recorded amounts for this year are as follows: The Director plans to use the allocation and information from last year

> Nicole is an engineer on temporary assignment at a refinery operation in Seaside. She has reviewed a cost estimate for $430,000, which covers some new processing equipment for the ethylene line. The equipment itself is estimated at $250,000 with a constr

> Estimate the cost in 2011 of chemical processing equipment if the cost of a unit one-fourth its size was $60,000 in 2005. The exponent in the cost capacity equation is 0.24. Use the M&S equipment cost index to update the cost.

> The net annual operating cost (AOC) for a water treatment filtration plant for a semi-conductor fabrication line was estimated to be $1.5 million per year. The estimate was based on the $200,000 per year cost of a 1-MGD plant. The exponent in the cost-ca

> A capital-budgeting problem is defined as follows: three projects are to be evaluated at a MARR of 12.5% per year. No more than $3.0 million can be invested. (a) Use a spreadsheet to select from the independent projects. (b) After some study, it was dete

> The cost of a high-quality 250-horsepower compressor was $14,000 when recently purchased. What would a 600-horsepower compressor be expected to cost?

> In 2015, Mariam, an engineer with Total Petroleum, decided to invest in stocks of a corporation that concentrates on crude oil production and refined products, though the price of oil is a very volatile commodity during recent years. She found the Global

> If the PCI editor at Chemical Engineering (CE) decides to update the Plant Cost Index so that the year 2010 has a base value of 100 instead of the current value of 550.8, determine the PCI values for 2014 and for 2015.

> In 2009, the Office of the Under Secretary of Defense projected that a critical International Defense Construction Cost Index would increase from its value then of 3423 to 4098 in 2016. If the actual value in 2016 was 5167, (a) what was the actual buildi

> Two people developed first-cut cost estimates to construct a new 130,000 square foot building on a university campus. Person A applied a general purpose per unit cost estimate of $180 per square foot for the estimate. Individual B was more specific: she

> A company has been invited to invest $1 million in a partnership and receive a guaranteed total of $2.5 million after 4 years. By corporate policy, the MARR is always established at 4% above the real cost of capital. The real interest rate paid on capita

> An engineer deposits $10,000 into an account when the market interest rate is 10% per year and the inflation rate is 5% per year. If the account is left undisturbed for 5 years, (a) How much money will be in the account? (b) What will be the purchasing p

> An engineer planning for her son’s college education made deposits into a separate high-risk brokerage account every time she earned extra money from side consulting jobs. The deposits and their timings are as follows: Year…………….. Deposit, $ 0……………………………

> As an innovative way to pay for various software packages that your company sells, a high-tech service company has offered to pay your company in any one of three ways: (1) pay $450,000 now; (2) pay $1.1 million 5 years from now; or (3) pay $200,000 now

> The two machines shown are being considered for a chip manufacturing operation. Assume the MARR is a real return of 12% per year and that the inflation rate is 7% per year. Which machine should be selected on the basis of an annual worth analysis if the

> Using a spreadsheet, (a) work Problem 12.19 as stated, and (b) expand the bundles to allow up to three projects and no more than $25,000 invested. Data from problem 12.19:

> (a) Calculate the perpetual equivalent annual worth in future dollars for years 1 through ∞ for income of $50,000 now and $5000 per year thereafter. Assume the market interest rate is 8% per year and inflation averages 4% per year. All amounts are quoted

> Joan, the project manager, asks you to evaluate alternatives A and B on the basis of their PW values using a real interest rate of 10% per year and an inflation rate of 3% per year (a) without any adjustment for inflation, and (b) with inflation consider

> A regional infrastructure building and maintenance contractor must decide to buy a new compact horizontal directional drilling (HDD) machine now, or wait and buy it 2 years from now when a large pipeline contract will require the new equipment. The HDD m

> The company you work for is considering a new product line projected to have the net cash flows (NCF) shown. The values are in future dollars, which have been inflated by 5% per year. Because the plant manager is unsure how the present worth is calculate

> Some of the following future cash flows have been expressed in then-current (future) dollars and others in CV dollars. Use an interest rate of 10% per year and an inflation rate of 6% per year. (a) Find the present worth. (b) Use a spreadsheet to find th

> Find the present worth of earthmoving equipment that has a first cost today of $150,000, an annual operating cost of $60,000, and a salvage value of 20% of the first cost after 5 years; these estimates being in future dollars. Assume the interest rate is

> For years, Jake has practiced the “buy now, pay later” philosophy of money management. For example, he purchased a car 3 years ago with a 6-year (72 month) loan at 7% per year interest. He has refinanced the loan each year at a higher interest rate; 7.5%

> (a) How long would it take to recover an investment of $245,000 in enhanced CNC controls that include axis control to eight axes on the milling model, if the associated income is $92,000 per year, expense is $38,000 per year, and the salvage value is est

> State why payback analysis should be used only as a supplemental analysis tool when an economic study is performed.

> James, the plant manager at Global Foundries (GF), received estimates from two contractors to improve traffic flow and repave the parking areas at his production facility. Proposal A includes new curbs, grading, and paving at an initial cost of $250,000.

> Use hand solution and the PW method to evaluate four independent projects. Select as many as three of the four projects. The MARR is 12% per year, and up to $15,000 in capital investment funds are available.

> Three methods can be used for producing heat sensors for high-temperature furnaces. The interest rate for the economic evaluation is 10% per year. Method A: Fixed cost of $140,000 per year Production cost of $62 per part Method B: Fixed cost of $210,000

> A land development company is considering the purchase of earth-moving equipment. This equipment will have an estimated first cost of $190,000, a salvage value of $70,000, a life of 10 years, a maintenance cost of $40,000 per year, and an operating cost

> There are a number of reasons for not paving a rural road, including low traffic volume, property owners who do not want it paved, speed control, and political issues. On the other hand, paved roads have lower road-user operating costs and are less costl

> A two-lane road surface can be finished with concrete or asphalt. Concrete will cost $2.3 million per mile (excluding right-of-way, environmental mitigation, or soil and site conditions) and will last for 20 years. If signing, mowing, and winter maintena

> A window frame manufacturer is searching for ways to improve revenue from its triple-insulated sliding windows, sold primarily in the far northern areas of the United States. Alternative A is an increase in TV and radio marketing. A total of $300,000 spe

> An automobile company is investigating the advisability of converting a plant that manufactures economy cars into one that will make retro-sports cars. The initial cost for equipment conversion will be $250 million with a 20% salvage value anytime within

> In desalting groundwater that contains a significant amount of sulfates, the concentrate that is generated during the desalting process can sometimes be tough on equipment, so the equipment’s useful life is uncertain. For a treatment train that has an in

> You work for Bellevue Window Products. While performing an analysis for a new window product, you found a report from last year that provided the following information regarding the manufacture of a similar product: annual production rate = 40,000 units;

> Two machines can be used to produce a part from titanium. The costs and other cash flows associated with each alternative are estimated. The salvage values are constant regardless of when the machines are replaced. Determine which alternative(s) should b

> A process for producing the mosquito repellant Deet has an initial investment of $200,000 with annual costs of $50,000. Income is expected to be $90,000 per year. (a) What is the payback period at i = 0% per year? A i = 12% per year? (Note: Round your an

> The independent project estimates below have been developed by the engineering and finance managers at Golphanen Enterprises. The corporate MARR is 8% per year, and the capital investment limit set by the CFO is $4 million. As a new employee in the Engin

> Monthly usage data for pallets used in a distribution center are given below: a. Calculate the monthly usage index for each month. b. Use simple linear regression to forecast total usage of pallets for year 5. c. Forecast the seasonally adjusted usage f

> Using the data from the problem 10: a. Using the average demand for the year as the base, compute a seasonal index for each month. b. Use regression to estimate the deseasonalized demand in each of the given months. Using these base values, compute a sea

> The following data show the number of laptop computers sold each month at a retail store: Month …………………………… Unit Sales January ………………………….…………. 200 February ………………………………….... 230 March …………………………………….…. 225 April ……………………………………….…. 240 May ……………………………………

> Assume you are forecasting with an exponential smoothing model using  = 0.6. How much weight is placed on the most recent actual demand? How much weight is given to the demand one time period older than the most recent data? How much weight is given to

> Use the table in problem 8 to answer the following question. A transportation manager must ship orders of materials weighing three pounds each to destinations in each of the seven zones listed in the table. The daily inventory holding rate is $7.50 per d

> The following table provides shipping rates for packages using UPS next day air or ground service options. The rates vary according to both the weight of the package and the distance of the shipment (larger numbered zones are farther away). Note that the

> A company needs to ship 500 men’s suits valued at $600 each to its distribution center. Annual inventory carrying costs are 20%. Shipment by truck would take 8 days at a cost of $500. Shipment by air would take 2 days at a cost of $2,000. If cost is the

> Richard's Sporting Goods needs to fill an online order for a gross (144) of hockey sticks. The manager is considering shipping the order by truck to the customer in Wisconsin, at a carrier charge of $75. The delivery will take five days and the order is

> You are shipping 200 diamonds to a customer located 2,000 miles away. The average value of the diamonds is $1,500. You can ship via air for $500 and the diamonds will arrive in two days or you can ship via a specialty ground carrier for $200 and the diam

> Using the rates in problem 8, suppose you have eight shipments of 900 pounds each that the carrier will consolidate into one shipment, for an additional charge of $200 (total). Should you agree to this?

> In an apparel factory, every time a sewing machine breaks, the symptom is recorded. In the past 30 days, all of the sewing machine breakdowns were recorded in the table below. Create a check sheet to organize and analyze these data.

> A trucking company publishes the following rates: Shipment Weight ………………. Cost per 100 Pounds Less than 500 lbs. …………………………..…….. $20.00 500–999 lbs. ……………………………………….. $18.00 1,000–4,999 lbs. ………………………………….. $15.50 5,000–9,999 lbs. ………………………………….. $14.00

> Suppose you have three shipments to make. One shipment has a weight of 3,000 pounds, the second weighs 7,000 pounds, and the third weighs 14,000 pounds. The transportation rates are: $18.00/cwt. for shipments of 1,000-5,000 pounds, $16.00/cwt. for 5,000-

> Atlas Corporation is considering a distribution center which will serve three primary market areas: Dallas, Texas; Atlanta, Georgia; and, St. Louis, Missouri. Atlas has determined that the latitude, longitude and populations of the three metropolitan are

> Determine the center-of gravity location for a company that wants to serve customers located in Chicago, Detroit, Indianapolis, and Cincinnati. To do this, you can find the X and Y coordinates by looking at the longitude and latitude for each city. Estim

> A manufacturing company wants to locate its new plant to facilitate shipping from its suppliers. Using the information below, determine the location using the center of gravity.

> Creative Crafts needed to determine where to locate a new warehouse to serve its retail stores in Ohio. Find the center of gravity location using the following information.

> Dansville Cabinets is considering a new warehouse to serve its major markets. Find the center-of-gravity using the following information:

> Using the rate schedule in the table in problem 8, determine whether or not economies of scale (weight) and economies of distance exist. (Hint: assume that distance from each zone to the next farthest zone is approximately constant across all zones.)

> Suppose Jones Company has orders from three customers located in the same market area. One order has a total weight of 4,000 pounds, the second weighs 8,000 pounds, and the third weighs 14,000 pounds. The transportation carrier quotes a freight rate of $

> Simply Chocolate, a retailer selling gourmet candy, has decided to expand its market by adding online sales. The supply and marketing managers must select a company to develop a website. Based on an initial screening, the team has narrowed the list to fo

> Using the date from problem 1, develop a check sheet by different class and analyze the results. Refer to the Problem Data 1:

> As the buyer for the city of Perrysburg, you are evaluating a supplier for garbage cans to be used in the city’s parks. Three suppliers returned acceptable bids within the allotted period. Based on these ratings from the supplier assess

> Your company has used competitive bidding to select a supplier for janitorial services. Three suppliers returned acceptable bids within the allotted period. Based on these ratings from the supplier assessment, which supplier appears to be the best? Why?

> The Big Apple Pizza Company, a manufacturer and distributor of frozen food products, is introducing a new frozen Chicago-style pizza. The new sauce for this pizza is a unique, special recipe and it resulted in very positive taste test ratings in market r

> Watch NU is a company that designs and manufacturers drones for military use. The supply manager is getting ready to renegotiate the contract with the security service provider that it uses for its offices and manufacturing plant. Three suppliers respond

> A construction equipment manufacturer is considering outsourcing assembly of dashboard components. Strategically the company is focusing on design and final equipment assembly. The company expects to make 75,000 units next year. The total variable costs

> A furniture manufacturer is assessing if it should make or buy the wooden frames for upholstered dining room chairs. The forecast is for 100,000 chairs to be produced per year. The fixed costs per year to make the frames are $150,000 and the variable cos

> An online retailer must decide if it should insource or outsource its website maintenance. The company estimates that 4,000 hours per year will be needed to maintain its website. To insource maintenance requires $25,000 in fixed costs per year and $27/ho

> The senior buyer at How Does Your Garden Grow Inc needs to select a supplier for plastic patio chairs for a one-year contract. The chairs will be shipped to the company’s distribution center in Toledo Ohio. Three potential suppliers hav

> The supply manager at a dishwasher manufacturer is assessing the company should purchase the pump from a supplier or assemble the pump in-house. Forecasts suggest that 15,000 pumps are needed per year. The annual fixed costs to assemble the pumps are$120

> Jones Company also found the following information about delivery to customers. Late deliveries were made for 8 percent of the orders. Early arrivals, which are unacceptable to customers, occurred for 2 percent of the orders. The company also experienced

> Using the data from problem 1, develop a check sheet and analyze the results. Refer to the Proble

> Jones Company found the following results when analyzing its delivery performance.

> In addition to the information concerning product availability, ABBA collected the following data concerning customer service performance: Late delivery—6 percent Damage—1 percent Incorrect documentation—4 percent Assuming these are the critical attribut

> ABBA Inc. collected the following data concerning orders and shipments during the most recent year. How well did ABBA perform in providing product to its customers?

> In the problem above, suppose performance on two of the factors that had been 95 percent falls to 90 percent. What is the impact on perfect order performance?

> Suppose a firm, in discussions with customers, learns that customers identify eight factors that they evaluate for every order they receive from suppliers. The firm then finds that its performance is 95 percent on six of these factors and 92 percent on t

> The following quarter, Aldo’s senior executive was interested in knowing whether performance had improved. The following table presents order and shipping data collected for the next quarter. How would you answer the senior executive?

> Aldo Inc. was reviewing its quarterly performance in providing service to customers. An analysis of order and shipping data was prepared and is shown in the table below. How well did Aldo perform in unit, line, and order fill rate?

> Ergonomics Inc. sells ergonomically designed office chairs. The company has the following information: Average demand = 20 units per day Average lead time = 30 days Item unit cost = $50 for orders of less than 200 units Item unit cost = $48 for orders of

> Suppose Johnson Plastics (in solved problem 5) reduces setup cost to $20. Rework the problem.

> Suppose Thomas Toys Ltd. (in solved problem 4) decides to reduce the review period from 21 days to 10 days. Rework the problem assuming everything else remains the same.

> Suppose management of Foods Galore (in solved problem 3) found that it had drastically underestimated its annual inventory carrying cost. Rather than the 10 percent carrying cost assumed in the solved problem, carrying cost is actually 25 percent. Rework

> Complete an ABC analysis of the five items that Jones Corporation carries in inventory.

> Again, using the data for Jones Corporation in problems 2 and 3, suppose Jones believes that in the upcoming year, the rate of sales expected for each of the five items is as follows: Item 1 = 4,000 units per day Item 2 = 2,000 units per day Item 3 = 15,

> Suppose Jones Corporation in the above problem determined that its annual inventory carrying cost = 18 percent. The item unit cost was as follows: Item 1 = $25.00 Item 2 = $60.00 Item 3 = $5.00 Item 4 = $10.00 Item 5 = $1.00 Compute the dollar values for

> You are the buyer for your university bookstore. One of the textbooks has a cost to you of $100 and you sell it to students for $140. Any copies of the book that you order and do not sell to students can be returned to the publisher for an average $80 cr

> After you reduce your order cost, as described in problem 24, the supplier in problem 23 changes its pricing policy to a standard $4.75 per unit, regardless of the order quantity. What is the impact of this policy change on the other variables?

> Suppose in problem 23, you were able to reduce your order cost to $10. What is the impact of this change on the other variables?

> You manage inventory for your company and use a continuous review inventory sys-tem to control reordering items for stock. Your company is open for business 300 days per year. One of your most important items experiences demand of 20 units per day, norma