Problem 5-11

A manager must decide which type of machine to buy, A, B, or C. Machine costs are as follows:

Machine	Cost
A	$	40,000
B	$	30,000
C	$	80,000

Product forecasts and processing times on the machines are as follows:

			PROCCESSING TIME PER UNIT (minutes)
Product	Annual Demand		A	B	C
1	16,000		3	4	2
2	12,000		4	4	3
3	6,000		5	6	4
4	30,000		2	2	1

a.	Assume that only purchasing costs are being considered. Which machine would have the lowest total cost, and how many of that machine would be needed? Machines operate 10 hours a day, 250 days a year. (Round up your answers to the next whole number. Omit the "$" sign in your response.)

Total processing time in minutes per machine:
A
B
C

Number of each machine needed and total cost
A	(Click to select)12	$
B	(Click to select)12	$
C	(Click to select)12	$
Buy (Click to select)21 (Click to select)BAC machines.

b.

Consider this additional information: The machines differ in terms of hourly operating costs: The A machines have an hourly operating cost of $10 each, B machines have an hourly operating cost of $11 each, and C machines have an hourly operating cost of $12 each. Which machine would be selected, and how many of that machine would be needed, in order to minimize total cost while satisfying capacity processing requirements? (Do not round intermediate calculations and round your answers to the nearest whole number.)

Total cost for each machine
A
B
C
Buy (Click to select)21 (Click to select)BCA machines.