Assignment:
Question 1. The VP of Operations estimates the production and shipping warehouse move for District 4 will provide room required to generate the additional $1 million/year product revenues to meet the current demand due to the expanded production capacity. Daily production generates $50,000 revenue so a week of downtime will cost $250,000 in lost revenues.
The move must be completed in 4 months.
Mileage between the old and new facilities is 10 miles.
Bids have been received from contractors to build out the new office space and production floor and have signed contracts for work as follows:
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Pack, move and unpack production equipment
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City Equipment Movers
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$150,000
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n/a
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5 Days
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Move non-production equipment and materials
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Express Moving Company
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$125,000
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n/a
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5 Days
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Framing
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East Side Framing & Drywall
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$121,000
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$125,000
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15 Days
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Electrical
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Sparks Electrical
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$18,000
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$12,000
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10 Days
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Plumbing
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Waterworks Plumbing
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$15,000
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$13,000
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10 Days
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Drywall
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East Side Framing & Drywall
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$121,000
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$18,000
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15 Days
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Finish Work
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Woodcraft Carpentry
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$115,000
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$15,000
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15 Days
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Build work benches for production floor
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Student Workers Carpentry
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$112,000
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$110,000
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15 Days
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