Question: Metal Casting Products ( MCP ) plans to replace its existing metal casting facility with a new one. MCP is considering two possible capacities for
Metal Casting Products MCP plans to replace its existing metal casting facility with a new one. MCP is considering two possible capacities for the new facility: or
units per year. The unit plant would have an annual fixed cost of Rs
and a per unit production cost of Rs; the unit plant would have an annual fixed cost of Rs and a per unit cost of Rs Suppose MCP projects its sales to be units next year and it expects them to grow by each year for the years. Which capacity option would you
recommend and why?
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