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Hightech manufactures color printers. It is in the process of planning the production and design of Model CX-700, one of its popular-selling models. The breakdown

Hightech manufactures color printers. It is in the process of planning the production and design of Model CX-700, one of its popular-selling models. The breakdown of the cost for producing Model CX-700 and the value index computed for this last period are shown below. (For simplicity assume there are only three components.)

Component Cost Function

Ink Cartridge $45 Determines color quality

Color Sensor 35 Matches screen color to printed color

Paper Sensor 20 Lights up indicator when our of paper

The customers want sharper colors, a better correspondence between what they see on screen and what they print on paper, and a sensor that can be connected to the PC speaker to issue an audio out of paper warning. The additional spending required to provide these features and the value index for these three components are as follows:

Additional Cost Value Index

Ink Cartridge $27 .780

Color Sensor $18 1.4689

Paper Sensor $5 .500

Total Additional Cost $50

The company feels that if it were to provide all three of these features, the customers would pay an additional $49 for the printer.

Do you think that Hightech should provide all of these features in the new model? Some of these features? None? Show your calculations.

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