Case as pic below

QUESTION #2 Could you list and develop other elements that could/should also influence the Management decision?

QUESTION #3 PerfMan SA will also need to make a decision about transportation mode for deliveries to this new customer (plane versus boat). Could you list and develop pros and cons arguments for each option?

PerfMan SA is a Belgian company, active in the customization of disposable biotech equipment and located in LLN. In line with his expansion objectives, their Sales Manager has just convinced a new customer in the United States, who is now ready to sign a brand-new contract on March, 1. Forecast are in the range of 1.000 additional units per year, with a first delivery expected in July Great news for PerfMan SA as they have plenty of available production capacity. Unfortunately, they quickly realize their small warehouse is almost full and cannot accommodate the strict 1 MOH (Month On Hand) safety stock policy requested by the new customer PerfMan SA Management is facing 3 options: Not sign the new contract Sign the new contract and rent a warehouse S km away from the main plant (available immediately) Sign the new contract and immediately start building an internal warehouse extension beside the main plant (could be available end of August and allow deliveries to start in October) 1) 2) 3) None of this was included in their 2018 Budget but Management was able to collect the following data: General information Tax rate of the company20% - Production Cost of 1 unit 800 EUR (PerfMan SA is usingthe Variable Costing method) -Selling Price of 1 unit to the new customer 1.200 USD, according to the new contract External warehouse Rental cost of the external warehouse 5.000 EUR per month, including all storage costs (utilities, handling...) A special small truck would need to be purchased for the shuttles between the external warehouse and the main plant. It would represent an investment (capital expenditure) around 40.000 EUR to be amortized over a 5 years period (linear method). This could be funded by available cash accumulated in the company Internal warehouse Required storage space 0,1 m2 per unit - Building cost 2.000 EUR per m2 Depreciation period 20 years Internal storage costs 20 EUR per m2 and per month This potential investment (capital expenditure portion) in a warehouse extension would require a 20 years loan from a bank for the full amount (interest of 4% per year and linear reimbursement) PerfMan SA is a Belgian company, active in the customization of disposable biotech equipment and located in LLN. In line with his expansion objectives, their Sales Manager has just convinced a new customer in the United States, who is now ready to sign a brand-new contract on March, 1. Forecast are in the range of 1.000 additional units per year, with a first delivery expected in July Great news for PerfMan SA as they have plenty of available production capacity. Unfortunately, they quickly realize their small warehouse is almost full and cannot accommodate the strict 1 MOH (Month On Hand) safety stock policy requested by the new customer PerfMan SA Management is facing 3 options: Not sign the new contract Sign the new contract and rent a warehouse S km away from the main plant (available immediately) Sign the new contract and immediately start building an internal warehouse extension beside the main plant (could be available end of August and allow deliveries to start in October) 1) 2) 3) None of this was included in their 2018 Budget but Management was able to collect the following data: General information Tax rate of the company20% - Production Cost of 1 unit 800 EUR (PerfMan SA is usingthe Variable Costing method) -Selling Price of 1 unit to the new customer 1.200 USD, according to the new contract External warehouse Rental cost of the external warehouse 5.000 EUR per month, including all storage costs (utilities, handling...) A special small truck would need to be purchased for the shuttles between the external warehouse and the main plant. It would represent an investment (capital expenditure) around 40.000 EUR to be amortized over a 5 years period (linear method). This could be funded by available cash accumulated in the company Internal warehouse Required storage space 0,1 m2 per unit - Building cost 2.000 EUR per m2 Depreciation period 20 years Internal storage costs 20 EUR per m2 and per month This potential investment (capital expenditure portion) in a warehouse extension would require a 20 years loan from a bank for the full amount (interest of 4% per year and linear reimbursement)