4 Sherman Industries manufactures plastic bottles for the food industry. On average, Sherman pays $79 per ton for its plastics. Sherman's waste-disposal company has increased its waste disposal-charge to $56 per ton for solid and inertwaste. Sherman generates a total of 500 tons of waste per month. Sherman's managers have been evaluating the production processes for areas to cut waste. In the process of making plastic bottles, a certain amount of machine "drool"occurs. Machine drool is the excess plastic that drips off the machine between molds. In the past, Sherman has discarded the machine drool. In an average month, 180 tons of machine drool is generated. Management has arrived at threepossible courses of action for the machine drool issue:Requirement 1. What is the annual cost of the machine drool currently? Include both the original plastic cost and the waste-disposal cost.Material cost of machine drool (plastic)Disposal costTotal annual costAnnual costRequirements1. What is the annual cost of the machine drool currently? Include both theoriginal plastic cost and the waste-disposal cost.2. How much would the company save per year (net) if the machine drool were tobe sold to the local recycler?3. How much would the company save per year (net) if the production processwere to be re-engineered?4. What do you think the company should do? Explain your rationale.XMore info1. Do nothing and pay the increased waste-disposal charge.2. Sell the machine drool waste to a local recycler for $10 per ton.3. Re-engineer the production process at an annual cost of $65,000. This changein the production process would cause the amount of machine drool generatedto be reduced by 60% each month. The remaining machine drool would thenbe sold to a local recycler for $10 per ton.PrintDone

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Sherman Industries manufactures plastic bottles for the food industry. On average, Sherman pays $79 per ton for its plastics. Sherman's waste-disposal company has increased its waste disposal-charge to $56 per ton for solid and inert waste. Sherman generates a total of 500 tons of waste per month. Sherman's managers have been evaluating the production processes for areas to cut waste. In the process of making plastic bottles, a certain amount of machine "drool" occurs. Machine drool is the excess plastic that drips off the machine between molds. In the past, Sherman has discarded the machine drool. In an average month, 180 tons of machine drool is generated. Management has arrived at three. possible courses of action for the machine drool issue: