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Cast Iron Stove Company wants to buy a molding machine that can be integrated into its computerized manufacturing process. It has received three bids for the machine and related manufacturer's specifications. The bids range from $3,500,000 to $3,550,000. The estimated annual savings of the machines range from $260,000 to $270,000. The payback periods are almost identical and the net present values are all within $8,000 of each other. The president just doesn't know what to do about which vendor to choose since all of the selection criteria are so close together.
Required:
What suggestions do you have for the president?
Productivity
The effectiveness in producing outcomes or results; can refer to the rate at which work is completed or the efficiency of resource use.
Output
The total amount of goods or services produced by a firm, industry, or economy within a specific period.
MRP Schedule
A document or plan that outlines the marginal revenue product of an input, showing how changes in quantity of the input affect revenue generated.
Perfect Competitor
An individual or company that cannot influence the market price because the market is saturated with similar products, acting within a perfectly competitive market.
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