Question
Whirpool makes a line of dishwashers that are distributed to retailers across the US to be sold to customers. The line consists of three models
Whirpool makes a line of dishwashers that are distributed to retailers across the US to be sold to customers. The line consists of three models of dishwashers.
Model | Selling price per Unit | Variable Cost per Unit | Demand/Year (units) |
---|---|---|---|
1 | 225 | 100 | 4000 |
2 | 300 | 230 | 2500 |
3 | 350 | 275 | 3000 |
Whirpool is considering the addition of a fourth model of dishwasher. This model would be sold to retailers for $425. The variable cost of this unit is $220. The demand for the new Model 4 is estimted to be 1300 units per year, 60% of these unit sales of the new model is expected to come from other models already being manufactured by the company (30% model 1, 10% model 2, 60% model 3). The company will incur a fixed cost of $100,000 to add the new model to the line.
A. Based on this data, should Whirlpool add the new Model 4 to its line of dishwashers?
B. Why or why not?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started