Terrell Manufacturing: Buying a Machine
Terrell Manufacturing (Terrell) was a small-scale producer of manifolds in Cleveland, Ohio. In late 2015, one of its clients decided to outsource the manifolds it had been producing in-house and approached Terrell with a proposal: Terrell could buy its equipment and produce the manifolds for the client. Terrell needed to quote a production rate based on the hourly cost of operating the equipment to make the client's manifolds. The rate needed to include the total cost of production, which involved processes in addition to those that were carried out on the purchased equipment. Terrell also needed to propose a payment plan for the machine.