Metters Cabinets, Inc., needs to choose a production method for its new office shelf, the Maxistand. To
Question:
Metters Cabinets, Inc., needs to choose a production method for its new office shelf, the Maxistand. To help accomplish this, the firm has gathered the following production cost data:
PROCESS TYPE ANNUALIZED FIXED COST OF PLANT &
EQUIP.
VARIABLE COSTS (PER UNIT) ($)
LABOR MATERIAL ENERGY Mass Customization
$1,260,000 30 18 12 Intermittent $1,000,000 24 26 20 Repetitive $1,625,000 28 15 12 Continuous $1,960,000 25 15 10 Metters Cabinets projects an annual demand of 24,000 units for the Maxistand. The Maxistand will sell for $120 per unit.
a) Which process type will maximize the annual profit from producing the Maxistand?
b) What is the value of this annual profit? LOP4
Step by Step Answer:
Operations Management Sustainability And Supply Chain Management
ISBN: 9781292295039
13th Global Edition
Authors: Jay Heizer, Barry Render, Chuck Munson