Answers to Numerical Questions in Problem Sets

The purpose of this note is to give you the final answers of numerical problems, for you to assess whether you have been correctly solving the assigned problems. Detailed answers will be separately posted on the web, after due date of each problem set.

Problem Set 1: no numerical problems

Problem Set 2:

Q 3: no numerical problem

Q 6: 227.27 units per year; Q 9: 300 units per month

Q 14: 3,112 pumps per month, 2,404 pumps per month

Q 16: 50 units per month

Q 21: (a) 500 castings per hour, (b) If total costs increase by more than 42%, then 100 castings per hour would be the profit-maximizing production rate

Q 24 (a) For each cost component (capital, labor, maintenance), calculate cost per part and add them up. Machine A \$5.75 per part and Machine B \$5.32 per part

Q 24 (b): Machine A \$3.09 per part and Machine B \$3.66 per part

Q26: Consider tool cost + operator cost + tool changer cost + overhead for one cycle of operation (i.e., tool grinding time + production time or time between tool grinds). Note one unsharpened carbon steel tool lasts 10 cycles and one unsharpened tool steel tool lasts 5 cycles. Carbon steel \$0.76 per piece and Tool Steel \$0.71 per piece

Q 34: Total cost for 40 units with Lathe \$200, with AS Machine \$97

Q 36: Profit per ounce with Method A is \$62.42 and with Method B is \$76.50.

Problem Set 3A:

Q 4: \$200 each year for the first 4 years and \$100 each year for the remaining 4 years. Total interest \$1,200

Q 5: Total interest: \$1,823.07

Q 7: a) Year 1 Principal \$3,141; Year 3 Interest \$211.77; Year 3 Principal \$3,529.54; b) \$3,529.54

Q 9: \$398; Q 11: \$5,276; Q 15b: \$1,516,600; Q 21: \$109.56 (in terms of equivalent time values, equate initial investment to the sum of four years of net incomes and resale value, and solve for resale value); Q 26: \$14,490 or e

Problem Set 3B:

Q 31: 5.2% per year; Q 33: 7% per year; Q 34: \$11,090.40 (problem on deferred annuities; use time scale in months); Q 40: \$384.56 (3 interest factors)

Q 54: \$981.30; Q 57: \$3,500.14; Q 65: \$721.28; Q 66: \$3,917.90

Q 79: \$13,774.06; Q 81: a) \$18,255.20; b) \$18,764.10; c) \$18,672.70

Q 84: \$374.10; Q 88: \$11,359; Q 102: \$880.44