Question: Creative Cabinets, Inc., needs to choose a production method for its new office shelf, the Maxistand. To help accomplish this, the firm has gathered the
Creative Cabinets, Inc., needs to choose a production method for its new office shelf, the Maxistand. To help accomplish this, the firm has gathered the following production cost data:
| Annualized Fixed Cost of Plant & Equipment | Variable Costs (per unit) ($) | |||
| Process Type | Labour | Material | Energy | |
| Mass Customization | $1,260,000 | 30 | 18 | 12 |
| Intermittent | $1,000,000 | 24 | 26 | 20 |
| Repetitive | $1,600,000 | 28 | 15 | 12 |
| Continuous | $1,960,000 | 25 | 15 | 10 |
Creative Cabinets projects an annual demand of 60,000 units for the Maxistand. The Maxistand will sell for $120 per unit.
a) Which process type will maximize the annual profit from producing the Maxistand?
Based on the projected annual demand, the best alternative available is to use the (Mass Customization OR Intermittent OR Repetitive OR Continuous) process.
b) What is the value of this annual profit?
The value of annual profit using this method is $___. (Enter your response as an integer.)
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