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"Timberland is considering manufacturing special crates to be used for shipping new mainframe computers.
"Timberland is considering manufacturing special crates to be used for shipping new mainframe computers. The company is working with a computer manufacturer who is thinking of using the new crates as a standard component for shipping their computers. Timberland's marketing manager has determined that mainframe computer buyers would be willing to pay $110 for a crate. Timberland's packaging and assembly cost for each new crates is $25. Research conducted jointly by the computer maker and Timberland's marketing personnel shows that customers want six features. These are: (1) durability, (2) ease of packing, (3) protection from damage (4) ease of use (5) compatibility with most brands of mainframes, and (6) ability to reuse the crates.Based on this research, Timberland's engineers have come up with a design that uses four main production modules or processes. Each process has several major sub-processes. A list of the major processes, together with preliminary cost estimates (includes all labor, material and overhead) for manufacturing or buying each process, appears in Table 1 below.