An Organization Is Considering Three Process Configuration Options

question 18

Essay

An organization is considering three process configuration options. There are two different intermittent processes, 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 per month 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. If the company produced 20,000 units, what would be its cost under each of the three choices?
b. Which process offers the lowest cost to produce 40,000 units?
What is that cost?

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Definitions:

Medicalization

The process by which human conditions and problems come to be defined and treated as medical conditions, and thus become subject to medical study, diagnosis, prevention, or treatment.

Mental Health Issue

Conditions that affect a person's thinking, feeling, mood, or behavior, such as depression, anxiety, bipolar disorder, or schizophrenia.

Acute Care

Medical treatment for short-term but severe episodes of illness, injury, or other health conditions, typically in a hospital or emergency care setting.

Epidemic

Occurs when the number of cases of a particular disease during a particular time period is significantly higher than might otherwise be expected.