Question
Your company completed a production line in 2010 to manufacture a certain new assembled product. Although demand growth was initially slow, demand for this product
Your company completed a production line in 2010 to manufacture a certain new assembled product. Although demand growth was initially slow, demand for this product is now growing rapidly. You have been appointed manager of a project to construct an additional production unit at the same location using the same technology. The production line total cost was $35.7M in 2010. Because the product demand is accelerating, your senior management directs that the new line capacity be 50 percent greater than the existing line. Target completion for this line is the end of 2018. No additional infrastructure is required. The construction cost index at the end of 2010 was 439.6 (based on 1959 costs). The construction cost index projected for 2018 is 595.5. (based on 1959 costs). The Engineering member of your team advises that a size scale-up correlation exponent of 0.7 should be used. What is the estimated cost of the larger second line to be completed in 2015?
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