Question: Sweet Wave Bakery has a machine that is continuing to break down and requires constant maintenance. The operations manager is estimating that this machine has
Sweet Wave Bakery has a machine that is continuing to break down and requires constant maintenance. The operations manager is estimating that this machine has
only more years of life. The machine produces an average of units per day at a cost of $ per unit. The bakery is considering replacing this machine with a
similar machine. The new machine would cost $ with a year life but could produce twice the production of the existing machine. The units sell for $ Sweet
Wave operates the line with this machine days each year. The sales are equal to production on this line.
Instructions:
Given the information above, what are the consequences of Sweet Wave replacing the maching that is slowing down production because of breakdowns?
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