Owner alexander zapota hopes the contract will be extended, Ask an Expert

Management Studies

Zapota, Inc., has a 1-year contract for the production of 200,000 gear housings for a new off-road vehicle. Owner Alexander Zapota hopes the contract will be extended and the volume increased next year. Zapota 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:
General- Flexible

Purpose Manufacturing Dedicated

Equipment System Machine
(GPE) (FMS) (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

Which process is best for this contract?

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Business Management, Management Studies

Category:- Business Management
Reference No.:- M9394315

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