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Borges Machine Shop, Inc., has a year contract for the production of gear housings for a new offroad vehicle. Owner Luis Borges hopes the ntract will be extended and the volume increased next year. Borges has eveloped costs for three alternatives. They are generalpurpose equipment GPE flexible manufacturing system FMS and expensive, but efficient, edicated machine DM The cost data follow:
tabletableGENERALPURPOSEEQUIPMENTGPEtableFLEXIBLEMANUFACTURINGSYSTEM FMStableDEDICATEDMACHINE DMtableAnnualcontractedunitstableAnnual fixedcost$$$
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