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Operations Decision

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1. Briefly describe the details of the fictitious business that you created for this assignment.
There are currently 100 workers being utilized that work for 20 days per month at a wage of $70 per day. The workers produce 6,000 units of output per month with variable costs of $2,000 per day. The fixed costs are not disclosed and we are told they are "high enough" so the total costs exceed the firms total revenue. The price of the firm's output is $32 and the marginal cost of the last unit is $30.
2. Access the current environmental scan factors. Determine the factors that will have the greatest impact on plant operations and management's decision to continue or discontinue operations.
Given the information supplied the biggest factors of an environmental scan are; the time frame the business hopes to be in the market (short run vs. long run), the elasticity of demand for the item the firm produces, competition (many firms vs. few firms), and production costs. Some other minor factors of an environmental scan show that learning curve of workers versus experience, turnover, and markets.
Time frame is one of the most important factors given the information about Company ABC because the fixed costs are not given but told to be "high". The reason this is a major concern has to do with the fact that in the short run not all inputs are variable and variable costs are dependent upon production. Production using the variable inputs is the only way to change profit losses or profit maximums. If the company has long run plans then the fixed costs issue is not the biggest problem at the moment because all inputs are variable and can change accordingly to the management's decisions. Given that we do not know the fixed costs it is crucial to access all possibilities. "Access to capital is a major problem for start up businesses.." (Access to Capital). Due to this information...

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