We are in the process of negotiating the purchase of new machinery for our KCl-Tech production process. Our old machinery fixed cost is $13,500.00, the new machinery will have a fixed cost of $18,500.00. However, the new machinery will reduce our variable cost of labor by one-half. In addition, we are in the process of negotiating a contract with a new raw material supplier to supply our primary raw material (K2CO3) for the production of our technical grade KCl (KCl-Tech). The new supplier can supply the K2CO3 for $475.00/ton which is $25.00/ton cheaper than our current K2CO3 supplier priced at ($500.00/ton). However, the new supply of K2CO3 with the lower cost comes with a 10% scrap rate compared to the 5% scrap rate that we have with our current supply of K2CO3.

Please make your recommendation based on the information above using Multi-Factor Productivity (MFP) to determine: 

1) Should we stay with the OLD EQUIPMENT and OLD supplier? Why/why not? CALCULATED WITHOUT A SCRAP RATE. 

2) Should we invest in the new EQUIPMENT and stay with the OLD k2CO3 supplier? Why/why not? CALCULATED WITHOUT A SCRAP RATE. 

3) Should we GO with the NEW EQUIPMENT but go with the OLD K2CO3 supplier? Why/why not? CALCULATED WITH A 5% SCRAP RATE. 

4) Should we invest in the new EQUIPMENT and enter into a contract with the new K2CO3 supplier? Why/why not? CALCULATED WITH A 10% SCRAP RATE.