A manager must decide which type of equipment to buy, Type A or Type B. Type A equipment costs$ 15,000 each , and Type B costs $ 11,000 each . The equipment can be operated eight hours a day, 250 days a year. Either machine can be used to perform two types of chemical analysis, C1 and C2. Annual

Question

A manager must decide which type of equipment to buy, Type A or Type B. Type A equipment costs$ 15,000 each , and Type B costs $ 11,000 each . The equipment can be operated eight hours a day, 250 days a year. Either machine can be used to perform two types of chemical analysis, C1 and C2. Annual service requirements and processing times are shown in the following type of equipment should be purchased, and how many of that type will be needed ? The goal is to minimize total purchase cost.

		PROCESSING TIME PER ANALYSIS(hr)
Analysis Type	Annual Volume	A	B
C1	1,200	1	2
C2	900	3	2

Accepted Answer

Total processing time (Annual volume ×Processing time per analysis) needed by type of equipment:

		PROCESSING TIME PER ANALYSIS(hr)
Analysis Type	Annual Volume	A	B
C1	1,200	1	2
C2	900	3	2

Total processing time available per piece of equipment is 8 hours/day × 250 hours/day =2,000.Hence, one piece can handle 2,000 hours of analysis, two pieces of equipment can handle 4,000 hours, and so on.

Given the total processing requirements, two of Type A would be needed, for a total cost of 2 × $ 15,000 = $ 30,000, or three of Type B, for a total B , for a total of 3 × $11,000 =$ 33,000. Thus, two pieces of Type A would have sufficient capacity to handle the load at a lower cost than three of Type B.

Question 5.P.4: A manager must decide which type of equipment to buy, Type A...

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