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Evaluating Cost Reduction Strategies
A national beverage company faces rising shipping costs due to the weight and fragility of its glass-bottled drinks. To address this, two plans are proposed.
- Plan A: Replace the current delivery trucks with a new fleet that has a slightly better fuel efficiency rating, incurring a significant capital expenditure.
- Plan B: Invest in research and development to create a new, lightweight, and shatter-resistant bottle made from a novel recycled polymer. This would also require a significant initial investment but would drastically reduce the weight of each shipment.
Evaluate the two plans. Which plan is a better example of using innovation to achieve a fundamental reduction in operational costs? Justify your reasoning by explaining the difference in the approaches.
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