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
PLANT & 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 12
Continuous $1,960,000 25 15 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 pro-
ducing the Maxistand?
b) What is the value of this annual profit?
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