You are hired as a consultant for Cool Zone Inc. The company currently has a 1-year contract for the production of 200,000 fuse-plugs for a new state of the art off-road vehicle. With an increasing demand for these vehicles, The owner however, hope that the contract will be extended which will result in increased volume next year. Cool Zone has developed cost for 3 alternatives namely: General-Purpose Equipment (GPE), Flexible manufacturing System (FMS) and expensive but market dominant machine (DM). The cost associated with labour, raw materials and equipment per unit produced is as follows: GPE is $15, while DM and FMS have an associated cost of $13 and $14 respectively. The cost associated with FMS is $200,000, GPE $ 100,000 and DM $500,000 respectively. Regardless of the decision made, the company has to produce a total of 200,000 fuse plugs. (c) If a contract for the second and third year is pending, does this have any implications for the process selection. Please provide ample explanation for your response,

You are hired as a consultant for Cool Zone Inc. The company currently has a 1-year contract for the production of 200,000 fuse-plugs for a new state of the art off-road vehicle. With an increasing demand for these vehicles, The owner however, hope that the contract will be extended which will result in increased volume next year. Cool Zone has developed cost for 3 alternatives namely: General-Purpose Equipment (GPE), Flexible manufacturing System (FMS) and expensive but market dominant machine (DM). The cost associated with labour, raw materials and equipment per unit produced is as follows: GPE is $15, while DM and FMS have an associated cost of $13 and $14 respectively. The cost associated with FMS is $200,000, GPE $ 100,000 and DM $500,000 respectively. Regardless of the decision made, the company has to produce a total of 200,000 fuse plugs. (c) If a contract for the second and third year is pending, does this have any implications for the process selection. Please provide ample explanation for your response,

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 5P: Hudson Corporation is considering three options for managing its data warehouse: continuing with its...

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