$11$:$54$

all LTE $62$

DOC$-20240723-$WA$0016.$

$1$ of $1$

Dear All,

Read through RMS PowerPoint and Notes

and Answer the following Questions

A manufacturer has two options for buying a new production line to produce up to $100,000$ products per year: A dedicated line that costs ZAR $70$ million or an RMS that costs ZAR $85$ million. The product is sold at ZAR$150$ per product.

Solve for the three scenarios,

$($a$)$ The production is $100,000$ products per year, for $6$ years, as was expected.

$(36$ Marks$)$

$($b$)$ After $2$ years of operation the market demand grows to $150,000$ units per year. The dedicated line is not scalable and cannot meet the additional product demand. For an additional investment of ZAR$15$ million, the reconfigurable system can supply the new demand for the next $4$ years. $(36$ Marks$)$

$($c$)$ After $2$ years of operating the original system, an unpredicted model change is needed $($again$,$ requiring $100,000$ units per year for the new model; the old one is discontinued$).$ A new dedicated line could be built to produce the new product, or the reconfigurable system can be reconfigured for an additional cost of ZAR$10$ million, and produce the new model for $4$ years. $(36$ Marks$)$

Regards

Dr$.$ Olukorede Adenuga