Quantitative Analysis for Management, 13/e

Solved Problems

1. Solved Problem M3-1 Terry Wagner is considering self-publishing a book on yoga. She has been teaching yoga for more than 20 years. She believes that the fixed costs of publishing the book will be about $10,000. The variable costs are $5.50, and the price of the yoga book to bookstores is expected to be $12.50. What is the break-even point for Terry?

   Solution

   This problem can be solved using the break-even formula in the module:

   $$\begin{array}{lll}\text{Break-even point in units}\hfill & =\hfill & \frac{\$10,000}{\$12.50-\$5.50}\hfill \\ =\hfill & \frac{\$10,000}{\$7}\hfill \\ =\hfill & 1,429\text{units}\hfill \end{array}$$

2. Solved Problem M3-2 The annual demand for a new electric product is expected to be normally distributed with a mean of 16,000 and a standard deviation of 2,000. The break-even point is 14,000 units. For each unit less than 14,000, ...