Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 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 75,000 75,000 75,000 Annual fixed cost $150,000 $250,000 $500,000 Per unit variable cost $16.00 $14.75 $13.00 Part 2 Based on the total cost, the process that is best suited for the current contracted volume is
Borges Machine Shop, Inc., has a 1-year contract for the production of 75,000 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 75,000 75,000 75,000 Annual fixed cost $150,000 $250,000 $500,000 Per unit variable cost $16.00 $14.75 $13.00 Part 2 Based on the total cost, the process that is best suited for the current contracted volume is
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
Problem 5.3SA
Related questions
Question
100%
Borges Machine Shop, Inc., has a 1-year contract for the production of
75,000
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
|
75,000
|
75,000
|
75,000
|
|
Annual fixed cost
|
$150,000
|
$250,000
|
$500,000
|
|
Per unit variable cost
|
$16.00
|
$14.75
|
$13.00
|
Part 2
Based on the total cost, the process that is best suited for the current contracted volume is
▼
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Follow-up Questions
Read through expert solutions to related follow-up questions below.
Follow-up Question
Suppose the contracted volume changes to
275,000
gear housings. Based on the total cost, the process that is best suited for the new volume is
▼
DM
FMS
GPE
Solution
by Bartleby ExpertKnowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.Recommended textbooks for you
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Marketing
Marketing
ISBN:
9780357033791
Author:
Pride, William M
Publisher:
South Western Educational Publishing
Purchasing and Supply Chain Management
Operations Management
ISBN:
9781285869681
Author:
Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:
Cengage Learning
Marketing
Marketing
ISBN:
9780357033791
Author:
Pride, William M
Publisher:
South Western Educational Publishing