BUSMGT 2321 Lecture Notes - Lecture 1: Rh Blood Group System, Break Even, Fixed Cost
26 Mar 2018
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You want to increase capacity by adding new equipment. A has a fixed cost of 50,000 and variance costs of 12/unit. Vendor b has a fixed cost of 70,000 and variable of 10/unit. Break-even = what we need to make 0 profit. Would select vendor a if expecting 8500 units sold. Indifference = don"t care, profit is = between options. 10,000 = x = indifferent at this quantity. 4. based on logic considers all options/information available to you will sometimes give unfavorable results. Bad decision: based on emotion do not consider all options or information can sometimes lead to favorable result. Worse to make a bad decision with a favorable outcome than a good decision with a bad outcome. May cause you to make numerous mistakes before realizing the first was a lucky result. Outcome = state of nature = no choice. Identify payoff for each combination of alternatives and outcomes.
