Meile Machine Shop, Inc., has a 1-year contract for the production of 225,000 gear housings for a new off-road vehicle. Owner Larry Meile hopes the contract will be extended and the volume increased next year. Meile has developed costs for three alternatives. They are general-purpose equipment (GPE), flexible manufacturing system (FMS), and expensive, but efficient, dedicated machine (DM). The cost data follow:
GPE FMS DM
Annual contracted units 225,000 225,000 225,000
Annual fixed cost $150,000 $225,000 $500,000
Per unit variable cost $15.00 $14.00 $13.00
a) The option GPE is best when the contracted volume is below __________ units.
b) The option Gms is best when the contracted volume is between ________ and _________ units.
c) The option DM is best when the contracted volume is over _________ units.