Assume that only purchasing costs are being considered. Which machines would have the lowest total cost, and how many of that machines would be needed? b. Consider this additional information: The machines differ in terms of hourly operating costs: The A machines have an hourly operating cost of $11 each, B machines have an hourly operating cost of $10 each, and C machines have an hourly operating cost of $12 each. Which alternative would be selected, and how many machines, in order to minimize total cost while satisfying capacity requirements? Show work and explain the process
- A manager must decide which type of machine to buy, A, B, or C. Machines costs are as follows:
| Machine | Cost |
| A | $40,000 |
| B | $30,000 |
| C | $80,000 |
Product
| Processing Time Per Unit (minutes) | ||||||
| Product | Annual Demand | A | B | C | Setup Times (minutes) | Production Lots (units) |
| 1 | 16,000 | 3 | 4 | 2 | 20 | 200 |
| 2 | 12,000 | 4 | 5 | 3 | 35 | 100 |
| 3 | 6,000 | 5 | 6 | 3 | 60 | 50 |
| 4 | 30,000 | 2 | 4 | 1 | 15 |
500 |
Machines operate 10 hours a day, 250 days a year. The manager wants to have a capacity cushion of 10%.
a. Assume that only purchasing costs are being considered. Which machines would have the lowest total cost, and how many of that machines would be needed?
b. Consider this additional information: The machines differ in terms of hourly operating costs: The A machines have an hourly operating cost of $11 each, B machines have an hourly operating cost of $10 each, and C machines have an hourly operating cost of $12 each. Which alternative would be selected, and how many machines, in order to minimize total cost while satisfying capacity requirements?
Show work and explain the process
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