Hi, need to submit a 2000 words essay on the topic Decision Analysis Shuzworld.
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A.After careful analysis, I recommend that the best option for Shuzworld is the purchasing of new equipment. A comparison was done of the options of either reconditioning the equipment that is already there, the purchase of new equipment or outsourcing of production. Alistair Wu and Angela Down got that data that was used to determine both the settled as well as variable costs from data that was provided. I made use of the break-even cost volume analysis tool for this particular comparison (Kolli, 2012). This tool helps in the overall analysis of cost based on the given variable as well as fixed costs. I was provided with the following information that I used together with the decision analysis tool (Mian, 2011).
B.Consideration in the recommendation
In the recommendation, there are alternatives that after considered in the company. When the business is making the decision of building new manufacturing stores, there are environmental factors that are considered and the profitability. There is consideration of building size and its cost. Cash flow is an important aspect to be ci9nsidered in the success of the business. The costs calculated in the chart does not consider the proximity of the store ton its suppliers and consumers. This important factor should be considered.
Reconditioning the equipment that the company already has would come with a fixed cost of $ 500,000 and variable costs of $ 1,000 for every batch of 1,000 sneakers that were produced. Purchase of new equipment has a fixed cost of $ 200,000 as well as variable costs of $ 500 for every batch of 1,000. The third option of outsourcing production has no fixed cost and a variable cost of $ 3,000 for every batch of 1,000(Mian, 2011).