Throughput

F5 Acca Article example

Cat Co makes a product using three machines – X, Y and Z. The capacity of each machine is as follows:
Machine. X. Y. Z
Capacity. 800. 600 500

The demand for the product is 1,000 units per week. For every additional unit sold per week, net present value increases by $50,000. Cat Co is considering the following possible purchases (they are not mutually exclusive):

Purchase 1 Replace machine X with a newer model. This will increase capacity to 1,100 units per week and costs $6m.

Purchase 2 Invest in a second machine Y, increasing capacity by 550 units per week. The cost of this machine would be $6.8m.

Purchase 3 Upgrade machine Z at a cost of $7.5m, thereby increasing capacity to 1,050 units.

ANSWER –

X. Y. Z. Demand

Current per
week capacity. 800. 600 500 1000

Buy z 800. 600. 1050. 1000

Buy y. 800. 1150. 1050. 1000

Buy x. 1100. 1150 1050 1000

buying z
Additional sales is 600- 500=100

Buying z&y
Additional sales is 800-600=300

Buying z,x&y additional sales is 1000- 500=500

IN THIS ANSWER I COULDN’T UNDERSTAND

BUYING z ADDITIONAL UNIT IS JUST 100
BUYING y ADDITIONAL UNIT IS JUST 300
BUYING x ADDITIONAL UNIT IS JUST 500

What is the logic of doing so

I was thinking
if buying z increase the capacity to 1050 then the additional unit might be 1050- 500= 550

COULD’T UNDERSTAND THESE ASWELL
Buying z&y
Additional sales is 800-600=300

Buying z,x&y additional sales is 1000- 500=500

Please help me
Thanks