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1. What are the advantages of mass customization to a manufacturing company? Describe the various types of mass customization with at least two examples of each. 2. a) Present Value. You make an investment of $350,000 in a fleet of hire cars. Your annual receipts are $55,000 and disbursements are $20,000. At the beginning of year 3 you invest an additional $80,000 in your car fleet. This gives you additional annual receipts of $30,000 and additional disbursements of $10,000 over the existing figures. After five years you expect to sell the whole fleet for a residual value of $180,000. Assuming a discount rate of 5%, what is the net present value for this business? As a whole, is it an acceptable investment? (10 marks) b) Internal Rate of Return (IRR). What is the internal rate of return for the following cash flow scenario? Year 1 = $130,000 expenditure; Year 2 = $39,000 income; Year 3 = $44,000 income; Year 4 = $16,000 income; Year 5 = $35,000 income; Year 6 = $41, 000 income. If your MARR is 9%, is this an attractive rate of return? (5 marks) c) Costs and Pricing. i. Make a list of the fixed and of variable costs you think would be incurred in running a bakery in a suburban shopping centre. ii. What is "gross profit margin"? Three bakers run a bakery for six days each week on an 8-hour shift each person per day. Their total fixed costs are $4,800 pw and their current variable costs total $3,000 pw. At present, they produce 7,400 loaves pw but sell only 7,000 pw, with the unsold loaves given to a charity at the end of each day, before they go stale. What selling price do they need to set per loaf sold to break even? What price would they need to charge if they set their gross profit margins at 25%. What is their labour productivity in loaves produced/hour worked and, at the 25% gross profit margin, in $ earnt/hour worked? (10 marks) 3. a) In what ways does improving total productivity improve a company's competitive position? (5 marks) b) A company machines extrusion nozzle for 3-D printer filament at a cost of $60 each nozzle. The target hole diameter is 1.75 mm. Oversized nozzles (>1.75 mm) must be rejected, but undersized nozzles can be reilworked. The following hole diameters were found in a batch of nozzles (in mm): 1.45 | 1.46 | 1.50 1.55 | 1.62 | 1.67 1.71 1.71 1.73 | 1.74 | 1.75 1.75 1.75 | 1.75 1.76 1.77 | 1.79 | 1.79 1.80 The cost of re-machining the 1.55 mm nozzle above was $5.00. What is the average Taguchi loss contained in the whole batch and cost of fixing the undersized nozzles? (10 marks)

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