Final answer:
Wellington Industries should compare the total cost of ownership for both options, including considerations of long-term benefits and potential operational impacts. If the new truck provides significant benefits and the old truck's repair costs are too high, purchasing may be the better choice.
Step-by-step explanation:
The decision to purchase a new delivery truck or repair an existing one is a common dilemma faced by businesses involving cost analysis.
Wellington Industries must compare the total cost of ownership (TCO) for the new truck against the TCO of the current truck with repairs. The TCO includes purchase price, depreciation, maintenance, repair costs, fuel efficiency, insurance, and potential downtime. If the cost of repairing the current truck exceeds the long-term benefits or if the new truck offers significant advantages such as increased reliability, better fuel economy, and lower maintenance costs, purchasing might be the better option.
It's also important to consider the potential impact on business operations. A new truck could offer innovative technology and operational efficiency boosting the company's competitive edge. Alternatively, frequent repairs could lead to unpredictable downtime and impact customer service negatively.