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:

$$

$$General$-$Purpose 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\mathrm{.}00$

$$14\mathrm{.}00$

$$13\mathrm{.}00$

Part $2$

The option GPE is best when the contracted volume is below