Borges Machine Shop, Inc., has a 1-year contract for the production of 250,000 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 250,000 250,000 250,000 Annual fixed cost $125,000 $250,000 $500,000 Per unit variable cost $18.00 $14.00 $13.00 If the contract for the second and third years is pending, for demand below 31,250 units, option ▼ GPE DM FMS is the best alternative for Luis. Part 2 For demand above 250,000 units, option ▼ GPE FMS DM is the best alternative for Luis.
Borges Machine Shop, Inc., has a 1-year contract for the production of 250,000 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 250,000 250,000 250,000 Annual fixed cost $125,000 $250,000 $500,000 Per unit variable cost $18.00 $14.00 $13.00 If the contract for the second and third years is pending, for demand below 31,250 units, option ▼ GPE DM FMS is the best alternative for Luis. Part 2 For demand above 250,000 units, option ▼ GPE FMS DM is the best alternative for Luis.
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
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Question
Borges Machine Shop, Inc., has a 1-year contract for the production of
250,000
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
|
250,000
|
250,000
|
250,000
|
Annual fixed cost
|
$125,000
|
$250,000
|
$500,000
|
Per unit variable cost
|
$18.00
|
$14.00
|
$13.00
|
If the contract for the second and third years is pending, for demand below
is the best alternative for Luis.
31,250
units, option
▼
GPE
DM
FMS
Part 2
For demand above
is the best alternative for Luis.
250,000
units, option
▼
GPE
FMS
DM
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