Catawba Industrial Company is located in the west of Charlotte. Maybe many of your are not familiar with Charlotte , so let me firstly give you a brief introduction of this city. It is the largest city in the U.S. state of North Carolina and the second largest financial center by assets following New York City. For example, Bank of America and the East Coast operations of Wells Fargo are headquartered in the city. Two nick names.

Back to the Introduction of Catawba.

It is a major supplier of automatic industrial paint systems which is mainly used for painting newly manufactured goods such as agricultural machinery, metal furniture, and appliances and other related industrial equipment. The company employed almost 1,200 persons and had more than $200 million in sales.

Within Catawba, it has three major departmens.1.2.3. As for Marketing depart., one of its task is to provide sales forecasts to the manufacturing depart.. For production depart., it has to provide the cost estimate to the manufacturing depart.. Then, after receiving these documents, the manager of manufacturing depart. has to decide whether to produce this product, by what price, what volume and so on.

As you see, the compressor manufacturing department is quite an core department in the company, now i'll give you a brief information about it.

First, the general manager of this department, Marge McPhee, who earned a Bachelor of Mechanical Engineering Degree from Georgia Tech. University. Due to her strong technical and managerial capabilities, she was recently promoted to this new present position.

Second, introduction of product: standard compressor.

Due to the higher direct labor cost on Sunday, which results in operating loss for each unit produced, the company decides to give up the plant on Sunday.

That's all for the background information about the department and the standard compressors.

What has happened recently?
Last week, MM went on a trip to attend a trade show which exhibits industrial equipment. After she came back, she found that there were two reports on her desk. one is sales forecast drafted by marketing department, the other one is cost estimate delivered by production engineering department. Both these two reports provide information about a new light weight compressor. So what MM should do now is to ascertain whether or not to introduce it, what volume to produce and what price to charge.

However, at the same time, MM still has two concerns.
First, if she introduces the new compressor, what may affect the existing standard compressor? How would the customer reflect on the new product, will they buy it?

Second, the compressor department was already operating at full capacity, therefore the new unit have to generate a higher return than the original one. However as I just told you that Catawba didn't carry out production on Sunday, but if it opens the plant on Sunday, will it to some extent release the production pressure and reduce the capacity? If open, will it be used for produce new compressor or standard compressor or any other product mix?