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The process engineer at Strowbridge Metal Works has the choice of machining a particular part on either of two machines. Orders for this part are received regularly, but the order sizes varies. When the order is processed on Machine A, four sequential setup operations of 1 hour each are required. Once set up, the machining time is 0.50 hours per unit. When the order is processed on Machine B, eight sequential setup operations of 0.75 hours each are required. Once set up, the machining time per unit is 0.55 hours. The hourly wage rates for the operators are $20 and $18 for Machine A and Machine B, respectively. The hourly overhead rates, including setup time, are $30 and $27 for Machine A and Machine B, respectively.

a. Which machine is preferred if the order size is 100 units?

b. Which machine is preferred if the order size is 500 units?

c. What is the breakeven order size?

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M91424997

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