A manager must decide which type of machine to buy, A, B or C. Machine costs are as follows: Machine A: $40000, Machine B: $30000, Machine C: $80000 Product forecasts and processing times on the machines are as follows: Processing time per unit (minutes) Product Annual demand Machine A Machine B Machine C 1 16000 3 4 2 2 12000 4 4 3 3 6000 5 6 4 4 15000 2 2 2

1. Assume that only purchasing costs are being considered. Which machine would have the lowest total cost, and how many of that machine would be needed? Machines operate 10 hours a day, 250 days a year.

2. Consider this additional information: The machines offer in terms of hourly operating costs: The A machines have an hourly operating cost of $10 each, B machines have an hourly operating cost of $11 each, and C machines have an hourly operating cost of $12 each. Which alternative would be selected, and how many machines, in order to minimize total cost while satisfying capacity processing requirements?