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Worst: The company terminates the contract right away and moves to the new facility in three months.
Best: The company produces 500,000, 250,000, and 250,000 pairsin each month respectively and stays in the current facility.
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
95%
(hard)
Question Stats:
31% (03:21) correct
69%
(03:27)
wrong
based on 189
sessions
History
Date
Time
Result
Not Attempted Yet
A company sells sneakers. It plans to start production of a new model in three months. Meanwhile, the current model it produces is not popular among buyers, so the company had to reduce the price. The company will lose $2 on every model produced in the next month. Then, the loss will increase by $1 per model in each following month.
The overall contracted amount is 1,000,000 pairs for the next 3 months. The maximum capacity of the facility is 500,000 pairs monthly. The minimum monthly amount is 250,000 pairs. The penalty for producing less is $100,000 for 200,000 - 249,999 pairs per month and $225,000 for 150,000 - 199,999 pairs per month. The company cannot produce less than 150,000 pairs monthly because anything less than 150,000 pairs will terminate the contract.
The penalty for producing less than the contracted amount (or in case of termination) is $2.50 for every pair of sneakers less than the contracted amount. Additionally, if the company terminates the production of the current model, it will lose this production facility. Relocating to another facility with the same terms and conditions will cost $1,345,000.
Select the Worst and the Best financial scenario among the given choices. Make only one choice in each column.
The overall contracted amount is 1,000,000 pairs for the next 3 months. The maximum capacity of the facility is 500,000 pairs monthly. The minimum monthly amount is 250,000 pairs. The penalty for producing less is $100,000 for 200,000 - 249,999 pairs per month and $225,000 for 150,000 - 199,999 pairs per month. The company cannot produce less than 150,000 pairs monthly because anything less than 150,000 pairs will terminate the contract.
The penalty for producing less than the contracted amount (or in case of termination) is $2.50 for every pair of sneakers less than the contracted amount. Additionally, if the company terminates the production of the current model, it will lose this production facility. Relocating to another facility with the same terms and conditions will cost $1,345,000.
Select the Worst and the Best financial scenario among the given choices. Make only one choice in each column.
| Worst | Best | Statements |
| The company terminates the contract right away and moves to the new facility in three months. | ||
| The company produces 500,000, 250,000, and 250,000 pairsin each month respectively and stays in the current facility. | ||
| The company produces 250,000, 250,000, and 250,000 pairsin each month respectively and stays in the current facility. | ||
| The company produces 500,000, 150,000, and 150,000 pairs in each month respectively and stays in the current facility. | ||
| The company produces 500,000 pairs in the first month andterminates the current contract. It moves to the new facilitywhen the new model is ready. |
ShowHide Answer
Official Answer
Worst: The company terminates the contract right away and moves to the new facility in three months.
Best: The company produces 500,000, 250,000, and 250,000 pairsin each month respectively and stays in the current facility.
Source: Source: 800 score
21 Apr 2020, 10:57
Kudos
Bookmarks
Worst be option A since it is closing the unit where in it will have to give 2.5$ per pair andcalso relocation charge of $1345000
Best would be option B since among all the options given in the question here the factory is manufacturing the highest number of sneakers,and the factory is also not relocating
Posted from my mobile device
Best would be option B since among all the options given in the question here the factory is manufacturing the highest number of sneakers,and the factory is also not relocating
Posted from my mobile device
10 Jun 2020, 01:52
Kudos
Bookmarks
Best option:
The company produces 250,000, 250,000, and 250,000 pairs in each month respectively and stays in the current facility.
Reason:
if 250000 250000 250000 are made for every month then
Loss suffered
500000+750000+500000 = 1750000 and penalty of 10000 for less pairs. Total 1850000
If 500000 250000 250000 are made for every month then
Loss suffered
1000000+1500000+500000 = 3000000
Please suggest if wrong.
The company produces 250,000, 250,000, and 250,000 pairs in each month respectively and stays in the current facility.
Reason:
if 250000 250000 250000 are made for every month then
Loss suffered
500000+750000+500000 = 1750000 and penalty of 10000 for less pairs. Total 1850000
If 500000 250000 250000 are made for every month then
Loss suffered
1000000+1500000+500000 = 3000000
Please suggest if wrong.
