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Borges Machine Shop, Inc., has a 1-year contract for the production of 225,000 gear housings for a new off-road vehicle. Owner Luis Borges hopes

   

Borges Machine Shop, Inc., has a 1-year contract for the production of 225,000 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: Annual contracted units Annual fixed cost Per unit variable cost General-Purpose Equipment (GPE) 225,000 $100,000 $15.00 Based on the cost, the process that is best suited for the current contracted volume is Flexible Manufacturing System (FMS) 225,000 $225,000 $14.50 Dedicated Machine (DM) 225,000 $480,000 $13.75 Borges Machine Shop, Inc., has a 1-year contract for the production of 250,000 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) 250,000 $150,000 $18.00 The option GPE is best when the contracted volume is below 0 units (enter your response as a whole number). The option FMS is best when the contracted volume is between 0 and 0 units (enter your responses as whole numbers). The option DM is best when the contracted volume is over 0 units (enter your response as a whole number). Flexible Manufacturing System (FMS) Annual contracted units Annual fixed cost Per unit variable cost 250,000 $250,000 $14.00 Dedicated Machine (DM) 250,000 $480,000 $13.00 Tim Urban, owner/manager of Urban's Motor Court in Key West, is considering outsourcing the daily room cleanup for his motel to Duffy's Maid Service. Tim rents an average of 50 rooms for each of 365 nights (365 x 50 equals the total rooms rented for the year). Tim's cost to clean a room is $12.50. The Duffy's Maid Service quote is $19.00 per room plus a fixed cost of $26,000 for sundry items such as uniforms with the motel's name. Tim's annual fixed cost for space, equipment, and supplies is $61,000. Based on the given information related to costs for each of the options, the crossover point for Tim = 0 room nights (round your response to the nearest whole number). If the number of room nights is less than the crossover point, then Based on the given room nights that Tim expects to rent (18,250), the best option is is the best option available to Tim. outsourcing not outsourcing Metters Cabinets, Inc., needs to choose a production method for its new office shelf, the Maxistand. To help accomplish this, the firm has gathered the following production cost data: Variable Costs (per unit) ($) Material Annualized Fixed Cost of Plant & Equipment $1,260,000 $1,000,000 18 26 $1,600,000 15 $2,000,000 15 Process Type Mass Customization Intermittent Repetitive Continuous Labor 30 24 28 25 unit. Metters Cabinets projects an annual demand of 60,000 units for the Maxistand. The selling price for the Maxistand is $120 per a) Based on the projected annual demand, the best alternative available is to use the b) The value of annual profit using this method is $0. (Enter your response as an inte Repetitive Continuous process. Mass Customization Intermittent Energy 12 20 12 10

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