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Meile Machine Shop, Inc., has a 1-year contract for the production of 200,000 gear housings for a new off-road vehicle. Owner Larry Meile hopes
Meile Machine Shop, Inc., has a 1-year contract for the production of 200,000 gear housings for a new off-road vehicle. Owner Larry Meile hopes the contract will be extended and the volume increased next year. Meile 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) Annual contracted units Annual fixed cost Per unit variable cost 200,000 $100,000 $15.00 The option GPE is best when the contracted volume is below 100000 units (enter your response as a whole number). The option FMS is best when the contracted volume is between and units (enter your responses as whole numbers). Flexible Manufacturing System (FMS) 200,000 $200,000 $14.00 Dedicated Machine (DM) 200,000 $500,000 $13.00
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