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Metalcrafters Inc.

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For Metalcrafters Inc., the first thing I would do is to decide whether or not each alternative is mutually exclusive or independent. In this case, the stamping press alternatives are mutually exclusive, the extrusion press alternatives are mutually exclusive, and the new parts orders are mutually exclusive. Beginning with the stamping press, the next thing I would do is figure out what the expected useful life is for each alternative. Because the SX-65 has a useful life of 5 years and the MD-40 has a life of 10 years, I would expand the life horizon of the SX-65 from 5 years to 10 years so that the two alternatives are comparable. Once the stamping press alternatives are easily comparable to one another, I would calculate the net …show more content…

In order to decide which order contract to fill, I would calculate the NPV of each contract and take into consideration the economic conditions surrounding each of the company’s situations. For example, because Beck Electric has been changing a lot of its parts from aluminum to plastic, resulting in a 15% drop in orders for Metalcrafters, it may not be in their future best interest for Metalcrafters to continue filling orders for Beck. Although they have a rapport with Beck, the best future relationship that Metalcrafters could establish might be with Sawmasters, a company that uses a lot of aluminum and one that Metalcrafters has wanted to do business with for a

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