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