7.1 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 EQUIPMENT MANUFACTURING MACHINE (GPE) SYSTEM (FMS) (DM) Annual contracted 200,000 200,000 200,000 units Annual fixed cost $100,000 $200,000 $500,000 Per unit variable cost $ 15.00 $ 14.00 $ 13.00 Which process is best for this contract? PX 7.2 Using the data in Problem 7.1, determine the most economical volume for each process. Px 7.3 Using the data in Problem 7.1, determine the best pro- cess for each of the following volumes: (1) 75,000, (2) 275,000, and (3) 375,000. 7.4 Refer to Problem 7.1. If a contract for the second and third years is pending, what are the implications for process selection?