The particular logarithmic function proposed in Example 13.4 is just one possibility for the cost of a setup cost reduction. In the previous problem, suppose instead that Machey’s has only three...

The particular logarithmic function proposed in Example 13.4 is just one possibility for the cost of a setup cost reduction. In the previous problem, suppose instead that Machey’s has only three possibilities. The company can either leave the setup cost as it is, spend C₁
dollars to reduce the setup cost to $100, or spend C₂
dollars to reduce it to $75. Analyze these possibilities for various values of C₁
and C₂
to see which is optimal in terms of total annual cost.

Example 13.4