Chronotronics produces two models of clock radios, the X-100 and the X-250 deluxe. Both products are currently packaged in a single-wall corrugation. Through close observation, the firm has discovered that 0.5 percent of both X-100s and X-2S0s are damaged between packaging and customer delivery.Chronotronics can package either model, or both, in double-wall corrugated fiberboard, which would reduce product damage by half. The current single-wall packaging costs $0.80 per unit. Double-wall packaging costs 20 percent more.The X-100 and X-250 have market values of $40 and $70, respectively. Damaged units are a total loss. Chronotronics sold 12,000 X-100s and 7,000 X-250s last year. Forecasts indicate consistent sales for the X-100 and a 5 percent increase in X-250 sales over the next year. Note: Round up for whole units lost.
a. From a least-cost perspective, should Chronotronics utilize double-wall corrugation with the X-100 next year?
b. From a least-cost perspective, should Chronotronics utilize double-wall corrugation with the X-250 next year?
c. From discussion earlier in the text, how might packaging improvements affect transportation costs?