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Should investment capital be used to create increase production of Part(p) now ordered from outside sources. Gross savings on production at a price of 17 $ versus 18 $ would result in a savings of 12853 $ however after allowing for 2 week inventory safety margin backup supply the savings would be decreased by 4250$ with holding and insurance costs continuing…
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Download file to see previous pages... If investing in this new production is solely based on the production of part p we would not advise investing in increased production facilities.
However it has been determined that out of the 250 day work year 22 cycles or production runs would need to be made keep a steady production utilization intake/output ratio. Exact production details were not given to us, but we cannot for see more than 150 days of production time being used leaving 100 days for a part p1 to be produced making the new facility truly profitable. ...Download file to see next pagesRead More
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