Reference no: EM1316009

Question: Assume you are the Director of Purchasing for a large commercial airline firm. Several years ago, anticipating significant growth in the air travel industry, you placed orders totaling $2100 million to purchase new aircraft that would seal a total of 4500 passengers. Some of the Aircraft were Boeing 747s that cost $200 million each & seal 400 passengers & Boeing 777s that cost $160 million each & seat 300 passengers. Others were European Airbus A321s that cost $60 million & seat 200 passengers. At the time you were instructed to buy twice as many US manufactured aircraft as foreign aircraft.

[A] Given that all other criteria remain the same, how many of each type of aircraft did you cancel?
[B] Given the selection of three aircraft, how many of each type of aircraft did yon order?

Due to recent poor economic conditions you have been told to after the order for new equipment you made several years ago. The new aircraft had not been received & placed into service yet because of the long lead time to manufacture such complex & sophisticated equipment. The revised budget for new aircraft is now $1810 million for 800 fewer total passenger seats. At this point in production Boeing charges $40 million for each 747 aircraft cancelled & $35 million for each 777 aircraft cancelled. In a similar fashion Airbus charges $20 million for each A32I aircraft cancelled.