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Problem 7.2 General-Purpose Equipment (Gpe)

This document presents information on four different manufacturing processes: mass customization, intermittent, repetitive, and continuous. It provides the annual fixed costs and variable labor costs for each process. Given a demand of 24,000 units per year with a price of $120 per unit, the intermittent process would maximize profits. The annual profit from selecting the intermittent process would be $200,000. The document also lists the material, energy, and total variable costs per unit for each process. Based on these costs and a production volume of 24,000 units, the intermittent process again provides the lowest total fixed and variable costs of $2,680,000.

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70 views9 pages

Problem 7.2 General-Purpose Equipment (Gpe)

This document presents information on four different manufacturing processes: mass customization, intermittent, repetitive, and continuous. It provides the annual fixed costs and variable labor costs for each process. Given a demand of 24,000 units per year with a price of $120 per unit, the intermittent process would maximize profits. The annual profit from selecting the intermittent process would be $200,000. The document also lists the material, energy, and total variable costs per unit for each process. Based on these costs and a production volume of 24,000 units, the intermittent process again provides the lowest total fixed and variable costs of $2,680,000.

Uploaded by

Lưu Gia Bảo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd
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Problem 7.

2
GENERAL-PURPOSE EQUIPMENT (GPE)
Annual contracted units $ 200,000
Annual fixed cost $ 100,000
Per unit variable cost $ 15

Solve for cross between GPE and FMS


100,000 + 15*V1 = 200,000 +14*V1
V1 = 100,000
Solve for cross between FMS and GPE
200,000 +14*V2 = 500,000 + 13*V2
V2 = 300,000

Process GPE is most economical from 0 to 100,000 units


Process FMS is most economical from 100,000 to 300,000 units
Process GPE is most economical when more than 300,000 units
FLEXIBLE MANUFACTURING SYSTEM (FMS) DEDICATED MACHINE (DM)
$ 200,000 $ 200,000
$ 200,000 $ 500,000
$ 14 $ 13
Problem 7.3

Annual contracted units


Annual fixed cost
Per unit variable cost

Answer:
As showed in Problem 7.2, we have:
Process GPE is best from 0 to 100,000 units
Process FMS is best from 100,000 to 300,000 units
Process GPE is best economical when more than 300,000 units
Conclusion:
At 75,000 units, we use GPE
At 275,000 units, we use FMS
At 375,000 units, we use DM
GENERAL-PURPOSE EQUIPMENT (GPE) FLEXIBLE MANUFACTURING SYSTEM (FMS)
$ 200,000 $ 200,000
$ 100,000 $ 200,000
$ 15 $ 14
DEDICATED MACHINE (DM)
$ 200,000
$ 500,000
$ 13
Problem 7.4
GENERAL-PURPOSE EQUIPMENT (GPE)
Annual contracted units $ 200,000
Annual fixed cost $ 100,000
Per unit variable cost $ 15

Answer:
The optimum process will change at 100,000 units and 300,000 units, as shown in Problem 7.2. If total units are 600,000 (3 yea
FLEXIBLE MANUFACTURING SYSTEM (FMS) DEDICATED MACHINE (DM)
$ 200,000 $ 200,000
$ 200,000 $ 500,000
$ 14 $ 13

00 units, as shown in Problem 7.2. If total units are 600,000 (3 years × 200,000), then DM has the lowest cost
Problem 7.9
VARIABLE COST (PER UNIT) ($)
PROCESS TYPE ANNUALIZED FIXED COST OF PLANT & EQUIP LABOR
Mass Customization $ 1,260,000.00 30
Intermittent $ 1,000,000.00 24
Repetitive $ 1,625,000.00 28
Continuous $ 1,960,000.00 25

Demand: 24000 units


Price: $120 per unit

a.)
VARIABLE COST (PER UNIT) ($)
PROCESS TYPE ANNUALIZED FIXED COST OF PLANT & EQUIP LABOR
Mass Customization $ 1,260,000.00 30
Intermittent $ 1,000,000.00 24
Repetitive $ 1,625,000.00 28
Continuous $ 1,960,000.00 25

Ans:
The Intermittent process will maximize the profit because it has the lowest cost

b.)

Ans: The value of this annual profit $200,000


MATERIAL ENERGY Total VC/unit ($)
18 12 60
26 20 70
15 12 55
15 10 50

MATERIAL ENERGY Total FC +VC (at 24,000 units)


18 12 60 $ 2,700,000
26 20 70 $ 2,680,000
15 12 55 $ 2,945,000
15 10 50 $ 3,160,000

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