Borges Machine Shop, Inc., has a 1-year contract for the production of 200,000 gear housings for a
Question:
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: LOP4 GENERALPURPOSE EQUIPMENT
(GPE)
FLEXIBLE MANUFACTURING SYSTEM (FMS)
DEDICATED MACHINE
(DM)
Annual contracted units 200,000 200,000 200,000 Annual fixed cost $100,000 $200,000 $500,000 Per unit variable cost $ 15.00 $ 14.00 $ 13.00 Which process is best for this contract?
Step by Step Answer:
Operations Management Sustainability And Supply Chain Management
ISBN: 9781292295039
13th Global Edition
Authors: Jay Heizer, Barry Render, Chuck Munson