Assume that you are a senior production manager and will be assisting contract attorneys resolving a contract dispute with the skilled machinists' union. You are assigned to advise attorneys whether to accept or reject a proposal that has been made. Your firm, like Boeing, is a commercial airline that holds defense industry contracts, in addition to servicing thousands of commercial customers daily. Certain groups of employees are currently demanding a number of costly concessions that would increase labor costs over time. However, an agreement with these groups would facilitate expansion across state lines into an area that will allow your firm to capture significant economies of scale and scope. Analyze tradeoffs of obtaining inputs through spot exchange, contracts, and vertical integration, and assess whether transactions costs or other considerations are important to consider. Evaluate circumstances in which economies of scale or scope, or other characteristics of production covered in Chapters 5 and 6, may justify an increase in moving costs of $290 million spread over the next five years. Your retirement analyst reports that your firm will obtain a decrease in pension liabilities of $441 million dollars spread in equal increments over the next ten years if you accept an increase in current wages of $372 million dollars spread over the next eight years. Apply present value analysis to assess how the level of the interest rate affects a decision to accept this set of concessions. Based on the results of these three analyses, short briefing document for circulation among the firm's attorneys on factors that you believe would justify accepting or rejecting these concessions. You may also suggest alternatives to this settlement. As you respond to other's comments, evaluate the strength of their arguments and offer additional information that you think may be of use in making their case for or against the proposed settlement.