A manager must decide which type of machine to buy, A, B, or C. Machine costs (per individual machine) are as follows:
Machine Cost |
A $40,000 |
B $30,000 |
C $80,000 |
Product forecasts and processing times on the machines are as follows:
Product Annual Processing Time Per Demand A B C |
1 18,000 4 2 1 |
2 20,000 1 5 3 |
3 20,000 5 6 6 |
4 16,000 4 6 3 |
a)Assume that only purchasing costs are being considered.
Compute the total processing time required for each machine type to
meet demand, how many of each machine type would be needed, and the
resulting total purchasing cost for each machine type. The machines
will operate 10 hours a day, 230 days a year. (Enter total
processing times as whole numbers. Round up machine quantities to
the next higher whole number. Compute total purchasing costs using
these rounded machine quantities. Enter the resulting total
purchasing cost as a whole number. Omit the “$” sign.)
Total processing time in minutes per machine: |
A |
B |
C |
Number of each machine needed and total purchasing cost |
A $ |
B $ |
C $ |
b)Consider this additional information: The machines differ
in terms of hourly operating costs: The A machines have an hourly
operating cost of $13 each, B machines have an hourly operating
cost of $11 each, and C machines have an hourly operating cost of
$12 each. What would be the total cost associated with each machine
option, including both the initial purchasing cost and the annual
operating cost incurred to satisfy demand? (Use rounded machine
quantities from Part a. Do not round any other intermediate
calculations. Round your final answers to the nearest whole number.
Omit the “$” sign.)
Total cost for each machine |
A |
B |
C |
Answer :
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