Processes r and t if demand for the product is 5,500 units

Reference no: EM13283289

Two processes are put in place for production. Neither will be removed. Process R is designed to produce 10,000 units per year and has a fixed cost of $90,000 per year. Process T has the same design capacity and has a fixed cost of $80,000 per year. Process R produces the initial 4,000 units at a variable cost of $8 per unit and the next 6,000 units at a variable cost of $17 per unit. Process T produces the first 5,000 units at a variable cost of $9 each and produces the next 5,000 at $5 each. Assume that the fixed costs are incurred even if no production is assigned to the process.

What should be the loads assigned to Processes R and T if demand for the product is 5,500 units?

Reference no: EM13283289

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