Brief 5 Dejan Lazaroski Essay

Better Essays
To: Professor Debra Petrizzo
From: Dejan Lazaroski
Subject: Problem 9-37
Date: 10/05/2014

Business Brief

The manager of Shamrock Manufacturing plans replacing of large piece of manufacturing equipment that the company uses in a production process with a more efficient model. The replacement of 3-years old equipment promises reducing the direct manufacturing and electricity costs. The manager of the plant hesitates replacing because the next year he expects promotion in larger Houston plant and the fright that he will he will reduce the operating income.


The plant manager should take into account as relevant the cost of the new equipment for the next two years, the disposal price of the old machines and the cash operating
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Include in that information options for action, both short-term and long-term. Recognize limitations in the terms of resources such as money, time, and people.)
Old machine historical costs, Old machine current book value, market value of the old machines, the cost of the new equipment.

Some important assumptions I am using in my thinking are…
(Figure out what you are taking for granted. Make sure these assumptions are reasonable. Watch out for self – serving or unjustified assumptions.)
All historical costs does not relate to a situation requiring decision because they have occurred already and don’t have any effect on the cost further.

The points of view relevant to this problem belong to…
(Who are your stakeholders? Determine whether the stakeholder’s point of view is relevant.)
The relevant costs for this situation are operating costs for the next two years, the disposal costs of the old machine and the costs of the new machines.

Note: Remember to view the information you have obtained for potential bias. This is from the perspective of your own bias to the research and the bias of the authors who compiled the data and the research you gathered. In other words, do not discount the importance of other’s data because of your own bias(is).
Step 3: Make predictions about the future.
If this problem gets solved, some important implications are…
(Evaluate options, taking into account the advantages and disadvantages of
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