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 (OPE) 200,000 200,000 Annual contracted units Annual fixed cost Per unit variable cost $125,000 $16.00 $200,000 $14.00 If the contract for the second and third years is pending, for demand below 37,500 units, option FMS is the best alternative for Luis is the best alternative for Luis. For demand above 280,000 units, option Flexible Manufacturing System (FMS) Dedicated Machine (DM) 200,000 $480,000 $13.00
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 (OPE) 200,000 200,000 Annual contracted units Annual fixed cost Per unit variable cost $125,000 $16.00 $200,000 $14.00 If the contract for the second and third years is pending, for demand below 37,500 units, option FMS is the best alternative for Luis is the best alternative for Luis. For demand above 280,000 units, option Flexible Manufacturing System (FMS) Dedicated Machine (DM) 200,000 $480,000 $13.00
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 5.2SA
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