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Om P10
Om P10
following inform
type cost
1 $10,000
2 14,000
PROCESSING TIME
Annual PER UNIT (MINUTES)
Product Demand 1 2
1 12,000 4 6
2 10,000 9 9
3 18,000 5 3
a. How many machines of each type would be required to handle demand if the machines will operate 8 hours a da
cushion in processing time would result for each?
Using Machine Type 1 250 X 8 X 60 =
b. With high certainty of annual demand, which type of machine would be chosen if that was an important conside
be chosen?
Answer : If we faced high uncertainty of annual demand, we would select the type of machine with the higher cap
of annual demand, we would select the type of machine with the lower capacity cushion (Machine Type
c. If purchasing and operating costs are taken into account, which type of machine would minimize total costs, give
$5/hr for type 2.
Given : Operating Cost $6 for type 1 & $5/hour for type 2
Purchase Cost for Machine Type 1 2.00 X $10,000 = $20,000
Total Operating Time for Machine Type 1 228000 minutes = 3,800 minutes
Total Operating Cost 3,800 X 6 = $ 22,800
Total Cost $20,000 + $22,800 = $42,800
hines will operate 8 hours a day, 250 days a year, and what annual capacity
hat was an important consideration? With low certainty, which type of machine would
of machine with the higher capacity cushion (Machine Type 2). If we faced low uncertainty
pacity cushion (Machine Type 1)
ould minimize total costs, given your answer for part a? Operating cost are $4/hr for type 1 and