Answer this question below using the following info: What strategy should Adam pursue $$ differentiation or cost$?$

Having reviewed the three options for reducing Adam$$s sanding time on the imminent opportunities, which do you think is the best option? Provide calculations and reasoned explanations. Do you think this would also be the best option longer term? Explain.

The information needed from the case and options available for this question are as follows:

Sanding and Costs

Cutting Boards

It will take three hours to make each board; the most labor$-$intensive element is sanding at roughly two hours. He is thinking of several alternatives for sanding:

$1.$ Buy a drum sander, which would cost $$1,250,$ and would cut his sanding time to one$-$eighth.

$2.$ Ask a semi$-$retired neighbor to do the sanding, using Adam$$s woodshop, supplies, and sanders, and pay them $$10$ per hour, the same amount they get paid at their current part$-$time job.

$3.$ Take the boards to a local Amish woodshop that is a $45-$minute drive $(35$ miles away$).$ He would pay to use their drum sander at $$50$ per hour in increments of one hour or part thereof, which would be operated by one of their employees. This price includes all supplies, such as sandpaper.

Sandpaper, Utilities, and Other Costs for Cutting Boards

Cost

Projected Amount Required$/$Usage$,$ etc.

Sandpaper for current sanders

$$20$ for $50$ disks

Three different grits required$$one disk of each grit per two boards $($small or medium$)$

Sandpaper for drum sander

$$10$ per drum

Three different drums required: each is a different grit, and each drum is enough for $50$ small or medium boards

Utilities

Gas heating and electricity

Rough estimate $-$ $$0\mathrm{.}75$ per board

Other costs

Average cost per mile for car

All costs, including gas

$$0\mathrm{.}46$

HEADBOARDS

Adam estimates that it would take $15$ to $20$ hours to make the headboard and approximately $75\%$ of this would be spent on sanding it with the tools he currently owns. His sanding time, however, could be reduced considerably if he were to avail of one of the options outlined earlier in Questions $1$ to $3.$

Sandpaper, Utilities, and Other Costs for Headboard

Cost

Projected Amount Required$/$Usage$,$ etc.

Sandpaper for current sanders

$$20$ for $50$ disks

Three different grits required$$three disks of each grit

Sandpaper for drum sander

$$10$ per drum

Three different drums required: each is a different grit, and each drum is enough for $10$ headboards

Utilities

Gas heating and electricity

Rough estimate $-$ $$5\mathrm{.}00$ per headboard

Other costs

Average cost per mile for car

All costs, including gas

$$0\mathrm{.}46$

Question $4$ Answer:

Option $1$: Buy a Drum Sander $($Cutting Boards$)$

Cost: $$1,250$

Sanding Time Reduction:$**$ Cuts sanding time to one$-$eighth.

Sanding Time per Board:$**2$ hours reduced to $0\mathrm{.}25$ hours $(15$ minutes$).$

Utilities: $$0\mathrm{.}75$ per Board

Cost per Board for Sanding:

Sandpaper: $$10$ per drum, each drum is enough for $50$ boards.

$$10/50$ boards $=$ $$0\mathrm{.}20$ per board.

Cost Calculation:

Sandpaper cost per board: $$10/50($boards$)=$ $$0\mathrm{.}20$

Total cost per board: $$0\mathrm{.}20($sandpaper$)+$ $$0\mathrm{.}75($utilities$)=$ $$0\mathrm{.}95$

Cost for $50$ boards: $(50)(0\mathrm{.}95)=$ $$47\mathrm{.}50$

Total cost including initial investment: $$1,250+$ $$47\mathrm{.}50=$ $$1,297\mathrm{.}50$

Option $2$: Ask a Semi$-$Retired Neighbor $($Cutting Boards$)$

Cost: $$10$ per hour.

Sanding Time per Board: $2$ hours.

Labor per Board for Sanding: $2$ hours x $$10=$ $$20.$

Utilities: $$0\mathrm{.}75$ per board

Cost Calculation:

Sanding Cost per Board: $$20.$

Sanding Cost for $10$ Boards: $10$ x $$20=$ $$200.$

Labor: $(2$hrs$)($$$10)=$ $$20$

Cost per board$**$: $$20($labor$)+$ $$0\mathrm{.}75($utilities$)=$ $$20\mathrm{.}75$

Total cost for $50$ boards: $(50)($$$20\mathrm{.}75)=$ $$1,037\mathrm{.}50$

Option $3$: Amish Woodshop $($Cutting Boards$)$

Cost: $$50$ per hour.

Sanding Time per Board: $2$ hours.

Cost per Board for Sanding: $$50($minimum one$-$hour increment$).$

Cost Calculation:

Drum sander cost per board: $(50)(0\mathrm{.}25)=$ $$12\mathrm{.}50$

Travel cost per board: $32\mathrm{.}20/10=$ $$3\mathrm{.}22$

Total cost per board: $$12\mathrm{.}50+$ $$3\mathrm{.}22+$ $$0\mathrm{.}75=$ $$16\mathrm{.}47$

Total cost for $50$ boards: $(50)($$$16\mathrm{.}47)=$ $$823\mathrm{.}50$

Option $1$: Buy a drum sander $($headboards$)$

Initial investment: $$1,250($already considered for cutting boards$)$

Sanding time reduction: From $15$ hours to $15/8=1\mathrm{.}875$ hours per headboard

Sandpaper cost: $$10$ per drum; each drum lasts for $10$ headboards

Utilities cost: $$5$ per headboard

Calculations:

Sandpaper cost per headboard$**$: $10/10=$ $$1\mathrm{.}00$

Total cost per headboard$**$: $$1\mathrm{.}00($sandpaper$)+$ $$5($utilities$)=$ $$6\mathrm{.}00$

Total cost for $10$ headboards: $(10)(6)=$ $$60$

Option $2$: Pay a semi$-$retired neighbor $($headboards$)$

Neighbor's wage: $$10$ per hour

Sanding time: $15$ hours per headboard

Utilities cost: $$5$ per headboard

Calculations:

Labor cost per headboard$**$: $(15)($$$10)=$ $$150\backslash )$

Total cost per headboard$**$: $$150($labor$)+$ $$5($utilities$)=$ $$155$

Total cost for $10$ headboards: $(10)($$$155)=$ $$1,550$

Option $3$: Use Amish Woodshop $($headboards$)$

Cost to use drum sander: $$50$ per hour

Travel cos: $$32\mathrm{.}20($round trip, $70$ miles$)$

Sanding time: $1\mathrm{.}875$ hours per headboard

Utilities cost: $$5$ per headboard

Calcula