Management Science

IMS1 Use of Quantitative Analysis
A quantitative analyst
typicall
y
focuses on
solving
a mathematical model
or
dealing with
technical aspects
of the model
, e.g.,
computations
and programming
.
However, a
business manager
is responsible for
interpreting and implementing
results of
the
quantitative analysis.
(a)
[10 pts]
Does the manager
have to
become involved in the technical aspects of
problem solving?
Explain why or why not.
(b)
[10 pts]
D
iscuss
w
hy
the manager’s
interpersonal skills are critical
in the
implementation process
.
Hint: Answers can vary.
IMS2 Outsourcing and Fixed Costs
[10 pts]
Explain why outsour
cing a
product
reduces
fixed
costs.
IMS3
Lin Plastics
L
in Plastics produ
ces a
variety of compact disc (CD) storage cases. L
in’s
best
–
selling
product is the CD
–
50, a slim, plastic CD holder with a specially designed lining that
protects the optical surface of the disc. Several product
s are produced on the same
manu
facturing line, and
a setup cost is incurred each time a changeover is made for a new
product. Suppose
that the setup cost for the CD
–
50 is $
3
,
000. This setup cost is a fixed
cost that is incurred regardless of the number of units eventually prod
uced. In addition,
variable
l
abor and material costs are $
2 for each unit produced, and each
unit sells for $
5.
(a)
[10 pts]
Show
detailed calculations
of (i) the volume
achieving a total profit of $
4,5
00
and also (ii) the breakeven point
.
(b)
[10
pts]
Derive
the total profit function
. What are
the total profits of (i) and (ii)
?
D
raw
t
he total profit function. In your drawing, show (i) and (ii). Show also the total profits
of (i) and (ii).
(c)
[
10
pts]
Use
Goal Seek in Excel to solve this problem and show your
Excel
worksheet.