Question

A firm is comparing two designs for a new product, designated “Design 1” and “Design 2.” Data concerning the design for disassembly for both designs are provided in the tables below.

Design 1:

Component	Resale Revenue per Unit	Recycling Revenue per Unit	Processing Cost per Unit	Disposal Cost per Unit
A	$5.60	$8.90	$3.50	$2.85
B	$2.56	$3.67	$3.25	$4.00
C	$1.34	$4.32	$0.69	$3.34

Design 2:

Component	Resale Revenue per Unit	Recycling Revenue per Unit	Processing Cost per Unit	Disposal Cost per Unit
A	$4.76	$5.68	$6.00	$2.13
B	$3.21	$5.28	$2.42	$3.59
C	$5.31	$6.98	$2.47	$4.90

a)Which design appears to be the best environmental design based on its revenue retrieval?

b)what is the dollar value of the revenue retrieval per unit?

Answer 1

Design 1:

Component	Resale Revenue per Unit	Recycling Revenue per Unit	Processing Cost per Unit	Disposal Cost per Unit
A	$5.60	$8.90	$3.50	$2.85
B	$2.56	$3.67	$3.25	$4.00
C	$1.34	$4.32	$0.69	$3.34
Total	$9.5	$16.89	$7.44	$10.19

Design 2:

Component	Resale Revenue per Unit	Recycling Revenue per Unit	Processing Cost per Unit	Disposal Cost per Unit
A	$4.76	$5.68	$6.00	$2.13
B	$3.21	$5.28	$2.42	$3.59
C	$5.31	$6.98	$2.47	$4.90
Total	$13.28	$17.94	$$10.89	$10.62

Revenue retrieval = (Total resale revenue + Total recycling revenue) – (Total processing cost +Total disposal cost)

Design 1

Revenue retrieval = (9.5 + 16.89) – (7.44 + 10.19)

= 26.39 – 17.63

= $8.76

Design 2

Revenue retrieval = (13.28 + 17.94) – (10.89 + 10.62)         

= 31.22 -21.51

= $9.71

a) Design 2 appears to be the best environmental design as revenue retrieval is more of Design 2.

b) The dollar value of the revenue retrieval per unit is $9.71