Panhandle Medical Practice

1. Estimate the base case cost of each alternative regarding the provision of ultrasound services. (For now, ignore the discount if three units are purchased.)

2. Which alternative has the lower total cost?

3. What value for travel and setup costs would make the costs of the two alternatives the same?

4. Now consider the 5 percent discount. What impact does this discount have on the decision? What discount amount would make the two alternatives equal in costs?

5. What subjective factors would influence the decision as to which alternative to choose?

6. What is your final decision?