Hightech manufactures color printers. It is in the process of planning the production and design of Model CX-700, one of its popular-selling models. The breakdown of the cost for producing Model CX-700 and the value index computed for this last period are shown below.
- Component Cost Function
- Ink Cartridge $45 Determines color quality
- Color Sensor 35 Matches screen color to printed color
- Paper Sensor 20 Lights up indicator when our of paper
The customers want sharper colors, a better correspondence between what they see on screen and what they print on paper, and a sensor that can be connected to the PC speaker to issue an audio "out of paper" warning. The additional spending required to provide these features and the value index for these three components are as follows:
- Additional Cost Value Index
- Ink Cartridge $27 .780
- Color Sensor $18 1.4689
- Paper Sensor $5 .500
- Total Additional Cost $50
The company feels that if it were to provide all three of these features, the customers would pay an additional $49 for the printer.Do you think that Hightech should provide all of these features in the new model? Some of these features? None? Show your calculations.