Closed operations several decades ago

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Reference no: EM133575343

PARRA INC was a manufacturer of specific parts for cars that closed operations several decades ago. However, she is interested in returning to manufacturing again. The machinery is unusable due to years of disuse without maintenance and obsolete due to technological advances in the industry.

To open operations again, PARRA INC needs to purchase some very modern machines that will facilitate the production process and allow lower costs.

There are several machines on the market, but the company is interested in two in particular. From the experience that the company directors have, they know approximately the amount of profit that each machine will produce if the demand for the parts were high or low.

A machine, let's call it Machine #1, would generate the company $35,000 in profit if demand for the parts was low and $65,000 if demand was high.

The other machine, let's call it Machine #2, would earn you profits of $25,000 if demand was low and $75,000 if demand was high.

According to the maximin concept, which machine will you decide to buy?

Explain why?

Reference no: EM133575343

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