Garden Variety Flower shop is open for eight (8) hours per day and twenty-five (25) days per month. To deliver bouquets to its customer it uses 1500 clay pots a month i.e. 60 clay pots per day. They are making these pots inside the shop with a machine which has a Design Capacity to can make 10 pots per hour. a. The shop has achieved an Effective Capacity to make 74 pots per day, but as the machine is getting old, the average Actual output of the last few days? Production is 58 clay pots per day. Calculate the Utilization and Efficiency of the Clay Pot Making Machine. b. As the business is expanding the manager receives a forecast for next year which is 2500 clay pots per month which means 30,000 pots per year. As the old machine is not capable to meet the requirement, the company proposed to install a new machine. At the same time, they received a quotation from a company making Clay Pot to BUY from them. The details are summarized in the following table. 

Please suggest whether the shop should MAKE or BUY the clay pots. 

Also, calculate at what quantity it is profitable to make the Clay Pots in the shop Buy Make None $ 250,000 Annual fixed cost $ 12.

Answer rating: 100% (QA)

ANSWER The clayey soil can be used to make toys and pots because the clayey soils intermolecular spa... View the full answer