Summary of Operations Research Knowledge Points (10)

A full set of operations research knowledge points

Chapter 10 Profit and Loss Analysis Model

1. Profit and loss analysis

Profit and loss analysis is a comprehensive analysis of the cost of a company’s products, product output (sales volume) and corporate profits

2. Break-even analysis is a management decision-making tool

Break-even analysis is a management decision-making tool. He uses Ali to illustrate the relationship between total amount and cost factors at a certain level.

3. Analysis of finished products and sales in the break-even problem

The so-called break-even point is when the business operation reaches this point, the total sales and total costs are exactly equal.
Corporate profit = sales revenue-total costs and expenses.
Costs are composed of fixed costs (production, sales, administrative and general expenses, etc.) and variable costs (raw materials, direct labor, production, sales expenses, etc.)

4. Product cost structure

The cost of industrial products can be divided into six items: raw materials, fuel and power fees, wages and surcharges, waste loss fees, workshop fees and business management fees

5. Cost of industrial products

1. According to its relationship with product output (or business volume), it is divided into fixed expenses and variable expenses.
   Fixed costs do not change with the increase or decrease of enterprise output within a certain period of time.
   Variable costs change with the increase or decrease in the output of a company's products.
   These two types of expenses can be distinguished through technical analysis and technical measurement, and can also be classified using historical material analysis or mapping methods.
2. Establish a cost structure.
   Fixed costs are further divided into two categories: prepaid costs and planned costs.
   Prepaid costs are determined by the provision of productivity.
   Planned costs are the expenses required by the management department to achieve the expected goals. The
   cost equation is: C = F + V = ( Fc + Fp )+V
   C is the total cost or production cost;
   V is the variable cost,
   F is the fixed cost or the fixed cost
   Fc is the prepaid cost, and keeps the total sales volume constant
   Fp is the planned cost, which varies with sales Fluctuates by volume.

6. Product sales structure

The relationship between market price and product can be represented by a straight line or a broken line, called the sales line
. The relationship between them:
total sales revenue (I) = product price (M) * sales volume (Q). The
profit and loss analysis model should be linear or non-linear. Two types

Seven, linear profit and loss analysis model

Linear profit and loss analysis model refers to changes in the cost and sales revenue with the production (or sales) increased in proportion to the increase of this linear change, generally available map (Figure breakeven) and mathematical equations (profit and loss analysis model) to describe

if Special instructions, we default production quantity = sales quantity in the calculation process.
The three basic formulas above are derived simultaneously:
Q= (F+S) / (M-V') At
breakeven,
Q0 = F / (M-V')
At this time
I = M * Q0 = MF / (M- V')

2. Marginal revenue: also known as marginal contribution, refers to the net value of product price minus unit variable cost, that is,
   marginal revenue = M-V'
3. Marginal rate of return: the ratio of the value of marginal revenue to the product's selling price, that is,
   marginal rate of return = (M-V') / M
4. Percentage of production capacity: the ratio of sales at break-even point to total production capacity.

8. Break-even chart

It consists of three straight lines: the fixed cost line F (horizontal line) that does not change with the output, the variable cost line V with the output change, and the sales revenue line I.

Nine, non-linear break-even diagram

1. Calculation of break-even point;
   I-C =0
   I is sales revenue, C is production cost
2. Calculation of the most profitable output Qmax
   
3. Calculation of the minimum output value Qmin of unit cost

10. Application of non-linear profit and loss analysis model

1. Product planning
2. The optimal plan for factory (enterprise) site selection
3. Selection and replacement of equipment
4. Mixed marketing
5. Manufacturing and buying

11. Calculation of Marginal Revenue, Marginal Rate of Return and Percentage of Production Capacity

Marginal revenue, also known as marginal contribution, refers to the net value of product prices minus variable costs.
The marginal rate of return refers to the ratio
of the value of the product's marginal return to the product's sales price. The marginal rate of return per dollar of sales = marginal rate of return * product sales ratio. Percentage of
production capacity, which refers to the ratio of sales at the break-even point to total production capacity.