Question & Answer: A machine shop manager has two machines that can do the same milling operation…..

A machine shop manager has two machines that can do the same milling operation. Machine B, which is designed for high volume, has a larger initial setup cot but lower per-unit variable costs.
Machine Setup Costs Variable Cost per Unit
A $8 $0.24
B $80 $0.09

The manager wants to determine which machine to schedule to minimize total cost when an order requires milling.

Determine the total cost equation for each machine.

Plot these two equations on one graph.

At what volume do machines A and B have the same total cost?

What decision rule should the manager use when determining which machine to use for a particular order requiring milling?

Expert Answer

Answer

Question & Answer: A machine shop manager has two machines that can do the same milling operation..... 1

Still stressed from student homework?
Get quality assistance from academic writers!