Write and label the cost equation

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A firm is about to undertake the manufacture of a product, and is trying to determine which process to use. There are two intermittent processes under consideration, as well as a repetitive focus process. The smaller intermittent process (SIP) has fixed costs of $4,000 per month, and variable costs of $8 per unit. The larger intermittent process (LIP) has fixed costs of $10,000 and variable costs of $4 per unit. A repetitive focus (REP) plant has fixed costs of $30,000 and variable costs of $2 per unit.

-Write and label the cost equation for each of the 3 processes if "Q" is the number of units to be produced.

-At what output does the large intermittent process become cheaper than the small one?

-If marketing wishes to sell 8,000 units per month which process should the operations manager choose to purchase and install to have the lowest costs?

Reference no: EM132690381

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