Solarcare Ltd manufactures plastic lenses for sunglasses at Queanbeyan in New South Wales one of its too selling lines is the XRP Lens, which has a scratch-resistant polarised surface. Earlier this year, a Taiwanese company entered the market offering a similar lens at a price 20 per cent below the XRP price of $1.50 per unit. Solarcare’s parent company has a target profit margin of 40 per cent (on sales) on each of its products.
1. What target cost would have to be set for the XRP to remain competitive and meet the requirements of Solarcare’s parent company?
2. Explain how Solarcare could apply the principles of life cycle management to achieve this cot
3. Explain how value engineering could help in this process.