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:

	GPE	FMS	DM
Annual contracted units	200,000	200,000	200,000
Annual fixed cost	$100,000	$200,000	$500,000
Per unit variable cost	$15	$14	$13

a) Which process is best for this contract?

b) The most economical volume for GPE is from 0 to between , for FMS is between and and for DM is above .

c) Determine what is the best process for each of the following volumes?

75,0000 --->

375,000 ---->