The graph above displays data from a manufacturers operations over a

Question

The graph above displays data from a manufacturer’s operations over a 12-month period.

The bar chart shows the total production volume (in units) for each month (measured on the left vertical axis), while the line graph shows the corresponding cost per unit (in euros, measured on the right vertical axis).

An operations analyst defines:

Economies of scale as any month-to-month period during which production increases while cost per unit decreases. For eg. if production increases from March to April, and correspondingly, cost per unit decreases, that counts as 1 month-to-month period.
An inefficiency event as any month-to-month period during which production decreases while cost per unit increases.

Based on the information in the graph:

The number of month-to-month intervals during which the company demonstrates economies of scale is and the first month in which the company demonstrates an inefficiency event is

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Official Answer

Dropdown 1: 9 Dropdown 2: June

Pray2K · Answer

The analysis of the Operation Analyst pretty much forms our base for answering the question.
1. There are total 9 Economies of Scale ( Increase in prod whilst a simultaneous decrease in the cost per unit ) namely: Jan-Feb, Feb-Mar, Mar-Apr, Apr-May, Jul-Aug, Aug-Sept, Sept-Oct, Oct-Nov & Nov-Dec. Thus 9 intervals.

2. An inefficiency event (Decrease in Prod and Increase in per unit cost) can be easily observed for months of June & July.

Bunuel · Answer

Solution:

Dropdown 1:  Number of month-to-month intervals showing economies of scale
An economy of scale occurs when, from one month to the next, production increases and cost per unit decreases.

Visually inspecting the graph, we observe the following intervals meet this condition:

January → February: Bar increases, line decreases
February → March: Bar increases, line decreases
March → April: Bar increases, line decreases
April → May: Bar increases, line decreases
July → August: Bar increases, line decreases
August → September: Bar increases, line decreases
September → October: Bar increases, line decreases
October → November: Bar increases, line decreases
November → December: Bar increases, line decreases

This gives a total of 9 intervals.

Correct answer: 9

Dropdown 2:  First month with a production decrease and cost increase
An inefficiency event is defined as a month where production decreases while cost per unit increases.

This pattern first occurs between:

May → June:

Bar decreases slightly → production falls
Line rises → cost per unit increases

This is the first month-to-month period in which both conditions for an inefficiency are satisfied.

Correct answer: June

Su1206 · Answer

Lets solve this visually.

Every event where line is sloping downwards AND bars are increasing in height is economies of scale. Opposite of that is innefficiency.

January to may is economy of scale (4 months), so is July to December (5 months). Thus total 9 instances.

June and july re inefficiencies, and , june is the first one.

The graph above displays data from a manufacturers operations over a

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The graph above displays data from a manufacturers operations over a

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