Question
10. A company must decide which type of machine to buy, and how many units of that type, given the following information: Type Cost
10. A company must decide which type of machine to buy, and how many units of that type, given the following information: Type Cost 1 $10,000 2 14,000 Product demand and processing times for the equipment are: PROCESSING TIME PER UNIT (minutes) Product Annual Demand 1 2 001 12,000 4 6 002 10,000 9 9 003 18,000 5 3 page 219 a. How many machines of each type would be required to handle demand if the machines will operate 8 hours a day, 250 days a year, and what annual capacity cushion in processing time would result for each? b. With high certainty of annual demand, which type of machine would be chosen if that was an important consideration? With low certainty, which type of machine would be chosen? c. If purchasing and operating costs are taken into account, which type of machine would minimize total costs, given your answer for part a? Operating costs are $6/hr for type 1 and $5/hr for type 2.
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