Question: 1. 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

1. Borges Machine Shop, Inc., has a 1-year

1. 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 Flexible Dedicated Machine Equipment (GPE) Manufacturing System (DM) (FMS) Annual contracted 200,000 200,000 200,000 units Annual fixed cost $140,000 $200,000 $400,000 Per unit variable cost $ 16.00 $ 15.00 $ 13.00 a. Which of the above providers is best for this 1-year contract? 2. Using the data in Problem 1, determine the most economical volume for each process

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