A Firm Is About to Undertake the Manufacture of a Product

question 12

Essay

A firm is about to undertake the manufacture of a product, and it is weighing three capacity alternatives: small job shop, large job shop, and repetitive manufacturing. The small job shop has fixed costs of $3,000 per month, and variable costs of $10 per unit. The larger job shop has fixed costs of $12,000 per month and variable costs of $3 per unit. The repetitive manufacturing plant has fixed costs of $30,000 and variable costs of $1 per unit. Demand for the product is expected to be 1,000 units per month with "moderate" market acceptance, but 2,000 under "strong" market acceptance. The probability of moderate acceptance is estimated to be 60 percent; strong acceptance has a probability of 40 percent. The product will sell for $25 per unit regardless of the capacity decision. Which capacity choice should the firm make?

Explain the role of intention in contract formation and interpret contracts using both objective and subjective standards.

Understand the conditions under which silence can be considered acceptance.

Distinguish between valid offers and advertisements.

Know the effect of specifying or not specifying the method of acceptance in an offer.

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Definitions:

Hospitalized Offenders

Individuals who have committed crimes and are undergoing treatment or are confined in a medical institution instead of a traditional correctional facility.

Forensic Psychologist

A professional who applies psychological principles and techniques to legal issues, including assessments, evaluations, and expert witness testimony.

Mental Disorder

A condition involving changes in thinking, emotion, or behavior (or a combination of these) that are associated with distress and/or impaired functioning.

Beneficial Treatment

Therapeutic interventions that positively impact the health or wellbeing of a patient, often evidenced by clinical outcomes.