Your group is the complete workforce for the Paper Plane Corporation. Established in 1943, Paper Plane has led the market in paper plane production. Presently under new management, the company is contracting to make aircraft for the U.S. Air Force. You must determine the most efficient method for producing these aircraft. You must make your contract with the Air Force under the following conditions:

a. The Air Force will pay $200,000 per airplane.

b. The aircraft must pass a strict inspection by a quality control manager.

c. A penalty of $250,000 per airplane will be subtracted for each failure to meet the production requirements.

d. Labor and other overhead will be computed at $3,000,000.

e. Cost of materials will be $30,000 per bid plane. If you bid for 10 but make only 8, you must pay the cost of materials for those you failed to make or those that did not pass inspection.

(Appendix)