Meile Machine Shop, Inc., has a $1-$year contract to produce $200,000$ gear housings for a new off$-$road vehicle. Owner Larry Meile 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:

GENERALPURPOSEEQUIPMENT $($GPE$)$

FLEXIBLE MANUFACTURINGSYSTEM $($FMS$)$

DEDICATEDMACHINE $($DM$)$

Annual contracted units

$200,000$

$200,000$

$200,000$

Annual fixed cost

$$100,000$

$$200,000$

$$500,000$

Per unit variable cost

$ $15\mathrm{.}00$

$ $14\mathrm{.}00$

$ $13\mathrm{.}00$

Which process is best for this contract?