Kayak: Why should I buy new ovens?
This article is intended for students.
This article applies to both Kayak Standard and Kayak Plus versions.
The main purpose of buying one or more new ovens is to increase the plant's production capacity with a long-term view to increasing the company's sales.
However, the addition of new ovens involves a break-in period for the equipment during the first year, resulting in a loss of overall plant productivity.
The increase in production time per kayak will lead to higher production costs such as:
- increased payroll
- higher raw material losses
In earnings terms, this means a rise in the cost of goods sold, reducing the gross margin for the current year.
Keep calm. The situation is temporary, and productivity will balance out in the following years.
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