Operations and Supply Chain Management, 9th Edition WileyPLUS Registration Card + Loose-leaf Print Companion
Operations and Supply Chain Management, 9th Edition WileyPLUS Registration Card + Loose-leaf Print Companion
9th Edition
ISBN: 9781119371618
Author: Roberta S. Russell
Publisher: Wiley (WileyPLUS Products)
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Chapter 6, Problem 14P

Gemstone Quarry is trying to decide whether to invest in a new material-handling system. The current system (which is old and completely paid for) has an annual maintenance cost of $10,000 and costs approximately $25 to transport each load of material. The two new systems that are being considered vary both in sophistication and cost. System 1 has a fixed cost of $40,000 and a cost per load estimated at $10. System 2 has a fixed cost of $100,000 but a per-load cost of $5. At what volume of demand (i.e., number of loads) should Gemstone purchase System 1? System 2?

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