Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow: General-Purpose Equipment (GPE) Flexible Manufacturing System (FMS) Dedicated Machine (DM) Annual contracted units 75,000 75,000 75,000 Annual fixed cost $150,000 $250,000 $500,000 Per unit variable cost $16.00 $14.75 $13.00 Part 2 Based on the total cost, the process that is best suited for the current contracted volume is
Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow: General-Purpose Equipment (GPE) Flexible Manufacturing System (FMS) Dedicated Machine (DM) Annual contracted units 75,000 75,000 75,000 Annual fixed cost $150,000 $250,000 $500,000 Per unit variable cost $16.00 $14.75 $13.00 Part 2 Based on the total cost, the process that is best suited for the current contracted volume is
Practical Management Science
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Publisher:WINSTON, Wayne L.
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Borges Machine Shop, Inc., has a 1-year contract for the production of
75,000
gear housings for a new off-road vehicle. Owner Luis Borges hopes the contract will be extended and the volume increased next year. Borges has developed costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow:|
|
General-Purpose Equipment (GPE)
|
Flexible Manufacturing System (FMS)
|
Dedicated Machine (DM)
|
|
Annual contracted units
|
75,000
|
75,000
|
75,000
|
|
Annual fixed cost
|
$150,000
|
$250,000
|
$500,000
|
|
Per unit variable cost
|
$16.00
|
$14.75
|
$13.00
|
Part 2
Based on the total cost, the process that is best suited for the current contracted volume is
▼
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Suppose the contracted volume changes to
275,000
gear housings. Based on the total cost, the process that is best suited for the new volume is
▼
DM
FMS
GPE
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