Space Age Furniture Company
Read “Space Age Furniture Company” in Chapter 9 of your text. Respond to the following and include any Materials Requirement Planning (MRP) calculations:
- Develop an MRP for Space Age Furniture Company using the information in the case including the production of sub-assemblies in lot sizes of 1,000.
- The lot size of 1,000 for sub-assemblies has produced a lumpy demand for part 3079. Suggest ways for improvements over sub-assemblies in lot sizes of 1,000.
- Analyze the trade-off between overtime costs and inventory costs.
- Calculate a new MRP that improves the base MRP.
- Compare and contrast the types of production processing—job shop, batch, repetitive, or continuous—and determine which the primary mode of operation is and why.
- Describe ways that management can keep track of job status and location during production.
- Recommend any changes that might be beneficial to the company and/or add value for the customer.
The final case study should demonstrate your understanding of the reading as well as the implications of new knowledge. The paper should integrate readings, scholarly sources, and class discussions into work and life experiences. It may include explanation and examples from previous events as well as implications for future applications.
The purpose of the final case study is for you to culminate the learning achieved in the course by describing your understanding and application of knowledge in the field of operations management.
#32. Purchase versus Lease. New Health Hospital Systems wants to either borrow money to purchase a hospital or else enter into a lease agreement with the city of Chesterville. The purchase price of the hospital is $35 million. Assuming 100% financing, the interest rate is 8% for the loan with an after-tax cost of debt of 5%. The length of the loan is 5 yrs. The before-tax lease payments are expected to be $8 million per year. The tax rate is 40% for New Health system. Should New Health system lease or borrow the money to purchase the hospital?
#33.Purchase versus Lease. Carolina Ancillary Services for Hospitals (CASH), a tax-paying entity, is considering the purchase of a 64-slice computed tomographic scanner. The cost of the scanner is $2,000,000. The scanner would be depreciated over 10years on a straight-line basis to a zero salvage value. At the end of 5 yrs, the scanner could be sold for its book value, $1,000,000. The tax rate is 40%. The financing options include either borrowing for the full cost of the scanner and selling it at the end of year 5 or leasing one. The lease option is a 5yr lease with equal before-tax lease payments of $550,000 per year. The borrowing alternative is a 5 yr loan covering the entire cost of the scanner at an interest rate of 6%. The after-tax cost of debt is 4%. Should CASH lease the scanner or borrow the full amount to purchase it?