Refer to Problem 7 5 If a contract for the second
Refer to Problem 7.5. If a contract for the second and third years is pending, what are the implications for process selection?
In problem 7.5, 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:



Which process is best for thiscontract?
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