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Chapter 1
Introduction
Today’s Objectives:
WHAT IS ECONOMICS ?
Example 1.1
Example 2.1:
Nonmonetary considerations:
Example 1.5
Example 1.6
For one product that a company manufactures, the purchased raw
material is 2 inch diameter × 10 feet long extruded aluminum bar
stock. This material costs $1.05/pound. Since the company
purchases an average of 100,000 pound/month, it is considering
manufacturing the raw material , which would require the
purchase of an extrusion machine and a cutoff saw. Raw material
for the extruder can be purchased in 4 inch × 4 inch × 57 inch long
cast aluminum ingots for $ 0.50/pound. The company’s process
engineer estimates the extruding operation would cost
$0.30/pound, and the subsequent cutoff operation would cost
$0.05/pound. The engineer also estimates there would be a 10%
scrap loss of material at the extrusion stage and a 5.7% loss of
material at the cutoff operations.
Answer:
Example 1.7