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Problem -
Metters Cabinets, Inc., needs to choose a production method for its new office shelf, the Maxistand. To help accomplish this, the firm has gathered the following production cost data:
Process Type
Annualized Fixed Cost of Pant & Equip.
Variable Costs (per unit) ($)
Labor
Material
Energy
Mass Customization
$1,260,000
30
18
12
Intermittent
$1,000,000
24
26
20
Repetitive
$1,625,000
28
15
Continuous
$1,960,000
25
10
Metters Cabinets projects an annual demand of 24,000 units for the Maxistand. The Maxistand will sell for $120 per unit.
a) Which process type will maximize the annual profit from producing the Maxistand?
b) What is the value of this annual profit?
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