How many machines in order to minimize total cost

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Reference no: EM131857027

A manager must decide which type of machine to buy, A, B, or C. Machine costs are as follows:

Machine	Cost
A	$40,000
B	$30,000
C	$80,000

Product forecasts and processing times on the machines are as follows:

		Processing	time per unit	(minutes)
Product	Annual Demand	A	B	C
1	16,000	3	4	2
2	12,000	4	4	3
3	6,000	5	6	4
4	30,000	2	2	1

a. Assume that only purchasing costs are being considered. Which machine would have the lowest total cost, and how many of that machine would be needed? Machines operate 10 hours a day, 250 days a year.

b. Consider this additional information: The machines differ in terms of hourly operating costs: The A machines have an hourly operating cost of $10 each, B machines have an hourly operating cost of $11 each, and C machines have an hourly operating cost of $12 each.

Which alternative would be selected, and how many machines, in order to minimize total cost while satisfying capacity processing requirements?

Reference no: EM131857027

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