AMIS 525 Capacity Case:

Notation
Quantity: CQ EDQ IDQ DQ = EDQ + IDQ PQ ESQ ISQ SQ = ESQ + ISQ

Transfer Pricing Partial Idle Capacity [Case IIB]

Capacity Q External Demand Q Internal Demand Q Total Demand Q Production Q External Sale Q Internal Sale Q Total Sale Q

Assumptions
Quantity: EDQ > IDQ EDQ < CQ DQ > CQ IDQ < CQ ISQ = IDQ external demand is larger than internal demand idle capacity exists total demand exceeds production capacity internal demand quantity can be satisfied in total by production capacity single source requirement; partial internal demand satisfacton is not feasible

Opportunity Cost Calculator For Situation: DQ > CQ, EDQ < CQ [Case IIB] single-source supplier [ISQ = IDQ], IDQ < CQ input cell Data: smp v bmp EDQ IDQ CQ tp specific transfer price in feasible range

seller market price seller variable cost buyer market price EDQ < CQ check failed IDQ < CQ check failed

Results: tp maximum tp minimum EDQ - ESQ CQ - EDQ

$0.00 #DIV/0! 0 0

buyer maximum for tp seller minimum for tp forgone external sales [units] idle capacity

cm oc DQ PQ ESQ ISQ SQ

$0.00 #DIV/0! 0 0 0 0 0

unit contribution margin unit opportunity cost DQ > CQ check failed production sold in external market sold to internal market sold

Company Perspective: $0.00 $0.00 $0.00 saving opportunity cost net benefit

Sharing of Benefit: #DIV/0! $0.00 #DIV/0!

1/9/2014

seller income buyer income total income