A firm is about to undertake the manufacture of a product, and is weighing three capacity options: small job shop, large job shop, and repetitive manufacturing. The small job has fixed costs of $3,000 per month, and variable costs of $10 per unit. The larg shop has fixed costs of $12,000 and variable costs of $5 per unit. A repetitive manufacturing has fixed costs of $30,000 and variable costs of $1 per unit.
a. What the total cost function for each alternative for each alternative on the same graph.
b. Which alternative should the firm choose if the demand for the product is expected to be 2000 per month?
c. Notify the demand ranges where capacity choice should the firm make.