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Problem -

Metters Cabinets, Inc., needs to choose a production method for its new office shelf, the Maxistand. To help accomplish this, the firm has gathered the following production cost data:

Process Type	Annualized Fixed Cost of Pant & Equip.	Variable Costs (per unit) ($)
Process Type	Annualized Fixed Cost of Pant & Equip.	Labor	Material	Energy
Mass Customization	$1,260,000	30	18	12
Intermittent	$1,000,000	24	26	20
Repetitive	$1,625,000	28	15	12
Continuous	$1,960,000	25	15	10

Metters Cabinets projects an annual demand of 24,000 units for the Maxistand. The Maxistand will sell for $120 per unit.

a) Which process type will maximize the annual profit from producing the Maxistand?

b) What is the value of this annual profit?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92174035

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