Final answer:
Foxy Sonic, Inc. should use a cost-benefit analysis to decide between purchasing a new machine or repairing the old one. They would compare the total costs and benefits of each option, taking into account factors like efficiency, durability, and potential operational savings.
Step-by-step explanation:
Foxy Sonic, Inc., when deciding whether to purchase a new machine or repair the old one, might consider using a cost-benefit analysis. This decision-making tool involves comparing the total costs and benefits of each option. For example, if production technology 3 has the lowest total cost because of cheaper machine hours, it might suggest a shift towards more machine use and less labor.
Conversely, if the cost of machines has increased, as in the case of production technology 2, one would expect a shift towards less capital and more labor. The company should also consider factors such as the efficiency, durability, and productivity enhancements that a new machine might offer versus the old one.
Ultimately, the goal is to select the option that offers the best value for money over the long term, factoring in not just the initial costs but also the potential operational savings.
Furthermore, companies might use a simple chart or a more sophisticated model to visualize potential costs over time and help in this analysis. Taking a strategic approach by weighing all these factors would lead to a more informed decision on whether to replace or repair machinery.