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All work must be original! Absolutely no outside websites are to be used!
Here is the asssignment:
Problem 1 ( 30 pts)
Borges Machine shop, Inc., has a 1-year contract for the production of 200,000 gear housing 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.
GPE
FMS
DM
Annual contracted units
200,000
200,000
200,000
Annual fixed cost
$100,000
$200,000
$500,000
Per unit variable cost
$15.00
$14.00
$13.00
Which process is best for this contract?
Problem 2 (40 pts)
Using the data in problem 1, determine the most economical volume for each process.
Problem 3 (30 pts)
John Smith company is considering producing a gear assembly that it now purchases from Tacoma Supply, In. Tacoma Supply charges $4 per unit. John is considering another option of producing in his company. Then, John estimates that it will cost $15,000 to set up the process and then $1.82 per unit for labor and materials.
1) Determine the number of units where either choice has the same cost.
2) Draw a graph illustrating the crossover (indifference) point. (note: it doesn’t have to be drawn to scale).
Assignment is posted in files as well
Thank you

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