Question: Problem 7.5 Data General Purpose Equipment (GPE) Flexible manu system(FMS) Dedicated Machine (DM) Annual contracted units 200 000 200 000 200 000 Annual fixed cost

Problem 7.5 Data

General Purpose Equipment (GPE)

Flexible manu system(FMS)

Dedicated Machine (DM)

Annual contracted units

200 000

200 000

200 000

Annual fixed cost

$100 000

$200 000

$500 000

Per unit variable cost

$15.00

$14.00

$13.00

a)Using the data in Problem 7.5, determine the economical volume for each process.

b)Using the data in Problem 7.5, determine the best pro- cess for each of the following volumes: (1) 75 000, (2) 275 000, and (3) 375 000.

c)Refer to Problem 7.5. If a contract for the second and third years is pending, what are the implications for process selection?

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