Overcoming bottleneck operation by adding new equipment

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Reference no: EM131707461

Bee Refrigeration Co. intend to increase capacity by overcoming a bottleneck operation by adding new equipment. Two vendor (A and B) have presented their proposal. The fixed cost and variable cost from the vendors are RM 50,000 & RM12.00 and RM 70,000 & RM 10.00 respectively. The revenue generated by each unit is RM 20.00. Which option is better, if the expected volume is 15,000 units? Justify why?

Reference no: EM131707461

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