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;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;Figure 2-1 Phases of the Life Cycle and Their Relative Cost;The general price-demand relationship;Total revenue depends on price and demand.;Calculus can help determine the demand that maximizes revenue.;We can also find maximum profit…;Figure 2-4 Combined Cost and Revenue Functions, and Breakeven Points, as Functions of Volume, and Their Effect on Typical Profit (Scenario 1);Figure 2-6 Typical Breakeven Chart with Price (p) a Constant (Scenario 2);Acme Manufacturing is a major player in the lawn sprinkler business. Their high-end sprinkler is used commercially, and is quite popular with golf course greens keepers. In producing these sprinklers Acme’s fixed cost (CF) is $55,000 per month with a variable cost (cv) of $15.50 per unit. The selling price for these high-end sprinklers is described by the equation p=$87.50 – 0.02(D).
What is the optimal volume of sprinklers? Does Acme make a profit at that volume?
What is the range of profitable demand?;And we can find revenue/cost breakeven.;Engineers must consider cost in the design of products, processes and services.;Two main tasks are involved in cost-driven design optimization.;Optimizing a design with respect to cost is a four-step process.;Here is a simplified cost function.;“Present economy studies” can ignore the time value of money.;As energy costs continue to rise, power efficiency is increasingly important. Acme Chemical is evaluating two different electric motors to drive a mixing motor and needs to perform a present economy study. The motor will produce 75 hp and will be operated eight hours per day, 365 days for one year (maintenance will be performed on second shift—assume no down time during operation), after which time the motor will have no value. Select the most economical motor. Assume Acme’s electric power costs $0.16 per kWh. 1 hp = 0.746 kW.
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