You are comparing replacing the current lab, which has a cost function of 400,00

Question

You are comparing replacing the current lab, which has a cost function of 400,000 + 15*Volume with an automated lab that has a cost function of 500,000 + 10*Volume. Doing so would reduce the error rate from 1.5% to 1%. Your volume is expected to be 45,000 tests per year. which is true?

You should keep the current lab, its fixed costs are smaller.

You should adopt the automated lab, its total costs and error rate are smaller.

you should keep the current lab, its total costs and error rate are about the same.

None of the above.

Explanation / Answer

It should go for automated lab, because total cost is lesser and also the error rate is smaller.

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.