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Case Palmstar Enterprise, Inc. Palmstar Enterprises, a leading manufacturer of handheld computers, is currently in the process of developing its next...

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How generalizable do you think the results of your analysis in this particular case are to other situations?
Case Palmstar Enterprise, Inc. Palmstar Enterprises, a leading manufacturer of handheld computers, is currently in the process of developing its next generation device, the model 2000c. A key feature of the 2000c is its color display. According to the original project schedule, the 2000c is to be released 1 month from now. Because the amount of time required to convert the existing software to capitalize on the color display was significantly underestimated, the project has fallen behind schedule. The project manager estimates that without additional resources, the development project will be 3 months late. He has also estimated that increasing the project’s budget of $3 million by 30 percent would permit the project to be completed on schedule. The added budget would be used primarily to staff the project with additional software engineers. If released on schedule, first quarter demand for the 2000c is forecast to be 200,000 units at an initial price of $450. Demand data for similar products suggest that unit sales will increase 5 percent per quarter over the product’s 3-year life. Despite pricing pressures in the market, accounting data indicate that Palmstar is able to maintain a 20 percent contribution margin to profit and overhead through continuous process improvements and efficiencies accruing from producing in larger volumes.
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Palmstar Enterprises, a leading manufacturer is stuck on a project decision, which requires an
additional $ 3 million increase in the budget of the project, to release the project on schedule.
If...

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