Chapter 5, Problem 11 A manager must decide which type of machine to buy, A, B, or C. Machine costs are as follows: Machine Cost A $40,000 B $30,000 C $80,000 Product forecasts and processing times on the machines are as follows: Processing Time per Unit (minutes) Product Annual Demand A B C 1 16,000 3 4 2 2 12,000 4 4 3 3 6,000 5 6 4 4 30,000 2 2 1 Assume that machines operate 10 hours a day, 250 days a year. If we only consider purchasing costs, which machine would have the lowest total cost?
Chapter 5, Problem 11 A manager must decide which type of machine to buy, A, B, or C. Machine costs are as follows: Machine Cost A $40,000 B $30,000 C $80,000 Product forecasts and processing times on the machines are as follows: Processing Time per Unit (minutes) Product Annual Demand A B C 1 16,000 3 4 2 2 12,000 4 4 3 3 6,000 5 6 4 4 30,000 2 2 1 Assume that machines operate 10 hours a day, 250 days a year. If we only consider purchasing costs, which machine would have the lowest total cost?
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Chapter 5, Problem 11
A manager must decide which type of machine to buy, A, B, or C. Machine costs are as follows:
| Machine | Cost |
| A | $40,000 |
| B | $30,000 |
| C | $80,000 |
Product forecasts and processing times on the machines are as follows:
| Processing Time per Unit (minutes) | ||||
| Product |
Annual Demand |
A | B | C |
| 1 | 16,000 | 3 | 4 | 2 |
| 2 | 12,000 | 4 | 4 | 3 |
| 3 | 6,000 | 5 | 6 | 4 |
| 4 | 30,000 | 2 | 2 | 1 |
Assume that machines operate 10 hours a day, 250 days a year. If we only consider purchasing costs, which machine would have the lowest total cost?
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