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Gemstone Quarry is trying to decide whether to invest in a new material-handling system. The current system (which is old and completely paid for)
Gemstone Quarry is trying to decide whether to invest in a new material-handling system. The current system (which is old and completely paid for) has an annual maintenance cost of $15,000 and costs approximately $20 to transport each load of material. The two new systems that are being considered vary both in sophistication and cost. System 1 has a fixed cost of $30,000 and a cost per load estimated at $12. System 2 has a fixed cost of $70,000 but a per- load cost of $7. Relative to the current system, at what volume of demand (i.e., number of loads) should Gemstone purchase System 1? Above units Relative to the current systemat what volume demand number of loads) should Gemstone purchase System Above 33
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