Borges Machine Shop, Inc., has a 1-year contract for the production of 200,000 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) 200,000 $100,000 $15.00 Flexible Manufacturing System (FMS) 200,000 $225,000 $14.00 Dedicated Machine (DM) 200,000 $500,000 $13.00 Annual contracted units Annual fixed cost Per unit variable cost The option GPE is best when the contracted volume is below units (enter your response as a whole number).
Borges Machine Shop, Inc., has a 1-year contract for the production of 200,000 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) 200,000 $100,000 $15.00 Flexible Manufacturing System (FMS) 200,000 $225,000 $14.00 Dedicated Machine (DM) 200,000 $500,000 $13.00 Annual contracted units Annual fixed cost Per unit variable cost The option GPE is best when the contracted volume is below units (enter your response as a whole number).
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Transcribed Image Text:Borges Machine Shop, Inc., has a 1-year contract for the production of 200,000 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)
200,000
$100,000
$15.00
Annual contracted units
Annual fixed cost
Per unit variable cost
The option GPE is best when the contracted volume is below
Flexible Manufacturing
System (FMS)
200,000
$225,000
$14.00
Dedicated
Machine (DM)
200,000
$500,000
$13.00
units (enter your response as a whole number).
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