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BN brake pads corporation hasnormally 100,000 pieces manufacturing capacity per month. Since the company manufactures with the orders of large automobile companies, it does not
BN brake pads corporation hasnormally 100,000 pieces manufacturing capacity per month. Since the company manufactures with the orders of large automobile companies, it does not work with any stock. The selling price of each pad is 100 TL and its variable cost is 60 TL. The monthly fixed cost of the company is 2,000,000 TL. The strike in the sector where the company was providing supplies stopped to be purchesed the materials.It is estimated that the strike will last three months. The material in the warehouses is sufficient to produce a total of 60,000 pieces (average 20,000 pieces per month) during this three month period. The company management is considering vacationing the factory during this three-month period. If activities are suspended, monthly fixed costs will decrease by 40%. However, during this period, a monthly allowance of 200,000 TL will be distributed to the workers. In addition, for restarting at the end of three months, a one-time starting cost will be 400,000 TL. Question 1: Should factory activities be stopped during the strike? Or should it continue to be operated with an average capacity of 20%? Question 2: Should the factory be closed if its sales drop to 10,000 units due to insufficient level of the production? Question 3: Should the factory be closed if its sales drop to 35,000 units due to the strike
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