Question: [ 5 ] OM 5 Chapter 5 # 1 0 . * A manager of Paris Manufacturing that produces computer hard drives is planning to

[5] OM5 Chapter 5 #10.* A manager of Paris Manufacturing
that produces computer hard drives is planning to lease a new
automated inspection system. The manager believes the new
system will be more accurate than the current manual
inspection process. The firm has had problems with hard drive
defects in the past and the automated system should help
catch these defects before the drives are shipped to the final
assembly manufacturer. The relevant information follows.
Current Manual Inspection System
Annual fixed cost =$35,000
Inspection variable cost per unit =$15 per unit
New Automated Inspection System
Annual fixed cost =$165,000
Inspection variable cost per unit =$0.55 per unit
a) What is the BEP for this decision?
?b Suppose annual demand is 8,000 units. Should the firm lease
the new inspection system?
[5] OM5 Chapter 5 #10.* A manager of Paris Manufacturing that

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