An Organization Is Considering Three Process Configuration Options

question 91

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 per month 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:

Joint Probability Distribution

Describes the probability distribution for two or more random variables simultaneously and their dependency relationships.

Mobile Phone Store

A retail store specializing in selling mobile phones and related accessories.

Marginal Probability Distribution

The probability distribution for a subset of variables within a multi-variable distribution, ignoring the presence or effects of the other variables.

Mobile Phone Store

It is a retail establishment that specializes in selling mobile phones and related accessories and services.