A Firm Is Considering Opening a New Plant in an Existing

question 239

Multiple Choice

A firm is considering opening a new plant in an existing building at a business park.It is located in the middle of a coal-producing region,which remains visibly contaminated by the effects of strip mining.The plant's heating system is based on coal heat,which is locally produced and relatively cheap,reducing the plant's operating expenses significantly. Company engineers note that the plant's roof is ideal for solar panels,which would reduce the firm's future dependence on coal,nuclear,and other conventional sources of energy.However,the cost of installing the panels is considerable and would mean that the new plant would not return a profit to the company for several years.The CEO feels that the panels should be installed.
Which of the following,if true,strengthens the ethical standing of the CEO's position?

• A)Due to new federal "cap and trade" controls,the cost of coal is likely to increase sharply in the next decade,along with that of electricity generated by burning coal.
• B)The commitment to "green" and sustainable energy use would lower the company's emissions locally as well as support the development of an alternative power industry.
• C)Regulations require mining firms in the region to restore natural landscaping after operations are completed,including sections stripped before the new standards were adopted.
• D)Projections made by the firm's long-range planning team indicate that the market will support full use of the new location for at least twenty years,enough time to see savings accrue from the solar panels.
• E)The most economical source for purchasing the solar panel equipment is owned by the same corporation responsible for strip mining in the new location.

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Definitions:

Carrying Costs

Expenses associated with holding inventory, such as storage, insurance, and opportunity costs, until it is sold or used in production.

Annual Requirements

The total quantity or volume of resources, goods, or services needed by an organization or project over the course of a year.

Pull System

A method of production control where downstream activities signal their needs to upstream activities, promoting just-in-time production and minimizing inventories.

Production Management

The process of planning, organizing, leading, and controlling the production of goods and services, focusing on efficient and effective production methods.