21-opportunity cost example

21-opportunity cost example -...

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A customer has offered to buy from LOD, a special type of high-technology  lubricant which is not among the lubricants that LOD normally produces.  Therefore the present offer represents a one-time project and the customer has  offered to pay €200 000 for the required amount. The lubricant requires mixing  an oil A and a special agent B. The necessary amount of A is available in the  stocks of LOD, but B must be obtained from an outside supplier and an order has  already been placed when the project was offered to LOD. The mixing process is  quite complicated and requires the use of two kinds of capital equipment C and  D; C is already owned by LOD but D must be leased from outside. Mixing also  requires that expert scientific help be obtained from a nearby University. LOD 
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This note was uploaded on 05/23/2010 for the course IE 398 taught by Professor T during the Spring '10 term at Middle East Technical University.

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21-opportunity cost example -...

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