Question: ( 1 - ) Cat ( dot { C } ) makes a product using three machines ( -
Cat dotC makes a product using three machines X Y and Z The capacity of each machine is as follows:
The demand for the product is units per week. For every additional unit sold per week, net present value increases by $ Cat Co is considering the following possible purchases they are not mutually exclusive:
Purchase Replace machine X with a newer model. This will increase capacity to units per week and costs $ mathrm~m
Purchase Invest in a second machine Y increasing capacity by units per week. The cost of this machine would be $ mathrm~m
Purchase Upgrade machine Z at a cost of $ mathrm~m thereby increasing capacity to units.
Required:
Which is Cat Co's best course of action?
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