Alternative 1 (Short term)

Horsepower
7.5
10

Reduce the price of DMC's 10-hp motor to that of the 7.5-hp motor

Manufacturing Cost
$
663.51
$
816.00

Horsepower of Installation
5
7.5
10

$
$

Total Cost
714.00
907.80

$
$

List Price
1,940.00
2,550.00

Monthly Base Charge per Horsepower

$
25.00
$
21.50
$
20.00

Alternative 2 (Mid term)

A

Horsepower
7.5

7.5

Alternative 3 (Long Term)

Horsepower
5

Price to Large Users

$
1,203
$
1,581

Monthly total charge cost

$
125.00
$
161.25
$
200.00

Reengineer DMC's present 7.5-hp motor to make its starting torque at least to that of
Manufacturing Cost
Sales & transp. costs
$
790 $
120

Price to Large Users

$
1,203

867

120

1,203

Start producing a 5-hp motor with the starting torque of a 10-hp unit
Manufacturing Cost
Sales & transp. costs
$
665 $
125

Price to Large Users

$
1,250

Break Even Point

Break Even Point**

163.04
239.13

Sales & transp. costs

120.28
158.10

$
$

al charge cost

Profit Margin
419.01
606.90

Profit Margin*
$

228.70

g torque at least to that of the Spartan 7.5-hp unit

Profit Margin
$

293

216

Profit Margin
$
units
units

460

Investment
75,000
Advertisement**
$
35,000
$