A chemical plant uses 200 o-rings to seal valves for


A chemical plant uses 200 O-rings to seal valves for carrying corrosive materials. Those O-rings cost $5.00 each and must be changed during regular maintenance every two months. Suppose the equipment must be shut down each time the O-rings are changed, and the cost of a shutdown is $5,000. A new product has twice the corrosive resisting power of the current O-rings. What is the maximum the seller of the new O-rings could charge the customers so that the customers see value in switching to the new O-rings from the one they currently use? [This problem highlights two concepts: Customer Value-in-Use Pricing and Total Cost]

Request for Solution File

Ask an Expert for Answer!!
Operation Management: A chemical plant uses 200 o-rings to seal valves for
Reference No:- TGS01494605

Expected delivery within 24 Hours