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4.Union Water Purification Company (UWPC) is evaluating two possible designs for a new production facility to replace their present obsolete facility. The total cost functions
4.Union Water Purification Company (UWPC) is evaluating two possible designs for a new production facility to replace their present obsolete facility. The total cost functions for the two facilities are: TC1 = 550,000 + 600Q TC2 = 300,000 + 825Q Both plants would produce an identical desalination device that sells for $2,600 per unit. UWPC foresees no change in demand and intends to estimate sales from an average of the last seven years: Year Sales (5000) 1 2 3 4 5 1,100 1,075 1,200 1,250 1,150 1,100 1,125 7 Calculate the operating leverage for both plant designs. Find the level of production at which neither plant design has an advantage. Considering the sales information given, which plant design has a greater probability of cost savings
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