Automatic vs$.$ Manual Processing

Assume

O$$ce Depot

processes $2,500,000$ photocopies per month at its service center. Approximately

$50\%$ of the photocopies require collating. Collating is currently performed by high school and col$-$

lege students who are paid $$10$ per hour. Each student collates an average of $5,000$ copies per hour.

Management is contemplating the lease of an automatic collating machine that has a monthly capac$-$

ity of $6,000,000$ photocopies, with lease and operating costs totaling $$3,000,$ plus $$0\mathrm{.}05$ per $1,000$

units collated.

REQUIRED

a$.$

Determine the total costs of collating $1,000,000$ and $2,000,000$ units per month:

$1.$ With student help

$2.$ With the collating machine

b$.$

Determine the monthly volume at which the automatic process becomes preferable to $($i$.$e$.,$ costs

less than$)$ the manual process.