Module - Discussion Topic: Process Selection
A manufacturer of parts has the following choices for producing a part: (i) Make the part using automated equipment (fixed cost = $150,000, variable cost per unit = $20), or (ii) Make the part using low-tech equipment (fixed cost = $50,000, variable cost per unit = $60). Annual demand for the part is estimated to be in the range of 2,400-2600 units.
1) Can breakeven analysis can be used to assist in the process selection decision?
2) Discuss the effects of volume (demand) range on process selection using breakeven analysis.
5-10 lines per question.