Asked by Radiate Waldemariam on Jul 04, 2024
Verified
A firm is about to undertake the manufacture of a product, and is weighing the process configuration options. There are two intermittent processes under consideration, as well as a repetitive focus. The smaller intermittent process has fixed costs of $3,000 per month, and variable costs of $10 per unit. The larger intermittent process has fixed costs of $12,000 and variable costs of $2 per unit. A repetitive focus plant has fixed costs of $50,000 and variable costs of $1 per unit.
a. At what output does the large intermittent process become cheaper than the small one?
b. At what output does the repetitive process become cheaper than the larger intermittent process?
Process Configuration
The arrangement and organization of the elements of a process, influencing its efficiency and effectiveness.
Intermittent Processes
Production processes characterized by non-continuous and irregular production operations, often used for producing a wide variety of products in small volumes.
Repetitive Focus
This refers to the concentration on repeating tasks or procedures to improve efficiency or skill.
- Analyze the point of equality in efficiency between two dissimilar production techniques or machines.
- Evaluate the cost-benefit relationship of different process configuration choices at multiple output volumes.
Verified Answer
(b) at 38,000 units, the repetitive shop is cheaper than the larger job shop.
Learning Objectives
- Analyze the point of equality in efficiency between two dissimilar production techniques or machines.
- Evaluate the cost-benefit relationship of different process configuration choices at multiple output volumes.
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