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You are hired as a consultant for Cool Zone Inc. The company currently has a 1-year contract for the productio 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. Coc Zone has developed cost for 3 alternatives namely: General-Purpose Equipment (GPE), Flexible manufacturin 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, whil 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 total of 200,000 fuse plugs. (a) Based on the information above, which is the best option for the contract? What technique was used t

You are hired as a consultant for Cool Zone Inc. The company currently has a 1-year contract for the productio 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. Coc Zone has developed cost for 3 alternatives namely: General-Purpose Equipment (GPE), Flexible manufacturin 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, whil 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 total of 200,000 fuse plugs. (a) Based on the information above, which is the best option for the contract? What technique was used t

Purchasing and Supply Chain Management
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
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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. (a) Based on the information above, which is the best option for the contract? What technique was used to determine your answer? Provide an explanation for your answer.
Transcribed Image Text: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. (a) Based on the information above, which is the best option for the contract? What technique was used to determine your answer? Provide an explanation for your answer.
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