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) Annual contracted units 75,000 Annual fixed cost $225,000 Per unit variable cost $14.75 Based on the total cost, the process that is best suited for the current contracted volume is 75,000 $100,000 $16.00 Dedicated Machine (DM) 75,000 $480,000 $13.50
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) Annual contracted units 75,000 Annual fixed cost $225,000 Per unit variable cost $14.75 Based on the total cost, the process that is best suited for the current contracted volume is 75,000 $100,000 $16.00 Dedicated Machine (DM) 75,000 $480,000 $13.50
Advanced Engineering Mathematics
10th Edition
ISBN:9780470458365
Author:Erwin Kreyszig
Publisher:Erwin Kreyszig
Chapter2: Second-order Linear Odes
Section: Chapter Questions
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Transcribed Image Text: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)
Annual contracted units
75,000
Annual fixed cost
$225,000
Per unit variable cost
$14.75
Based on the total cost, the process that is best suited for the current contracted volume is
75,000
$100,000
$16.00
Dedicated
Machine (DM)
75,000
$480,000
$13.50
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