Week 6 Assignment 2 Eco 550

Assignment 2 "Operations Decision" Assume you have been hired as a managing consultant by a company to offer some advice that will help it make a decision as to whether it should shut down completely or continue its operations. It currently uses 100 workers to produce 6,000 units of output per month (working 20 days / month). The daily wage (per worker) is $70, and the price of the firm's output is $32. The cost of other variable inputs is $2,000 per day. You are told that the firm's fixed cost is “high enough” so that the firm's total costs exceed its total revenue. The marginal cost of the last unit is $30. (Ch 7 & 8 to so briefly describe the details of the fictitious business that you created for this assignment. 1. Briefly describe the details of the fictitious business that you created for this assignment. In this paper, you will learn of a fictitious business, DCM, Inc., based out of Athens, Georgia and is the leading provider of consumers, especially college students, and business-to- organizations of a product known as widgets. DCM, Inc. employees 100 workers and they have hired in a consultant for advice to help them decide whether it should shut down, or if it has enough work to continue operations. DCM, Inc. was established in 2008 by Denise Brinson, which named the organization after herself, and her two adult children, Christopher and Misti. Now, all three are attending college and she developed these particular widgets to help all college students including herself and her children. Due to area competition and technological advancement, Denise has found that she must make some changes in the organization and/or product. Other information about DCM includes: • They employ 100 workers


Assignment 2& Operations DecisionEco 550T'e purpose o( t'is paper is to present t'e )o*+ca)orie micro*a!ea")e (oo,s- in support o( t'e company-s )ong run operations ,ecision p)ans. n t'e paper$  *i)) e/amining t'e resu)ts o( t'e ne* supp)y cur!e as it re()ects to t'e current market structure an, t'en take into account t'e e/pecte, c'anges to t'e se))ing en!ironment an, (actors t'at may 'a!e cause, t'e c'ange.  *i)) a)so e/amine c'ie( s'ort+run an, )ong+run pro,uction an, cost (unctions as app)ie, to t'is ne* cost ,ata to ,etermine i( t'ere are con,itions un,er *'ic' operations cou), "e ,iscontinue,. Gi!en t'e c'ange in t'e market structure t'ey *e "e a nee, to re!ie* t'e pricing structure so as to ma/imie pro(its. 1ina))y$  *i)) proposes t*o 23 course o( actions t'at t'e company s'ou), take to increase pro(ita"i)ity an, ma/imie s'are'o),er-s !a)ue.#. T'e e((ecti!eness o( t'e market structure t'e company is operating.E!ery company in a pure competiti!e market is a price taker4 t'e eui)i"rium price an, in,ustry output are is a ,irect resu)t o( ,eman, an, supp)y. T'e market (or )o*+ca)orie micro*a!a")e (oo,7 s'o*s 'o* ,eman, an, supp)y in t'e market (or )o* ca)orie (oo,s$ pro,uce, un,er con,itions o( per(ect competition$ ,etermine t'e tota) output an, price consumers are *i))ing to  pay. T'e eui)i"rium price is %08.65 cents4 t'e eui)i"rium uantity is 2%$995.:D ; 65$#00 +#00<:s ; +8=0=.>= ?8=.0=>=<.1irm operating in a pure competiti!e se))ing en!ironment 'as no ,irect say on *'at t'e (irm c'arges on its pro,uct$ 'o*e!er$ t'e (irm can contro) t'e uantity supp)y to t'e market. Accor,ing to S)ack @ Le*is$ success or (ai)ure ,epen,s in a pure competiti!e market )ies in 'o*a company contro)s pro,uction cost an, portrays its "ran, 200>3. n pick out t'e capacity o(


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