Question

Marked out of 10 Phone Automatic versus Manual Processing Mid-Town Copy Service processes 2.200,000 photocopies per month at its mid-town service center. Approximately 60 percent of the photocopies require collating Collating is currently performed by high school and college students who are paid $9 per hour. Each student collates an average of 5,000 coples per hour. Management is contemplating the lease of an automatic collating machine that has a monthly capacity of 5,000,000 photocoples with ease and operating costs totaling $1,384, plus $0.07 per 1,000 units collated (a) Determine the total costs of collating 500,000 and 1,400,000 per month 1. With student help: 500.000 900 1.400.000 2.520 2. With the collating machine 500.000 1.400.000 (b) Determine the monthly volume at which the automatic process becomes preferable to the manual process 300.000 coples Should Mid-Town Copy lease the automatic collating machine at this time? Midtown should lease the collating machine only if the monthly volume is less than 800,000 copies. Given the current cost structure Midtown should not lease the collating machine regardless of the monthy volume Midtown should only lease the collating machine if the monthly volume is more than 500,000 copies Midtown should lease the collating machine at the current monthly volume to search Coupet. Autom. HW 2 Week el Pendavis ACC SL DO 2:20 PM 9/19/200 Job cesting in

Answer 1

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= goo = 2520 1 a. with student help Gollating 500000 = 9x(500000/5000) Collating 1400000 = 9x{1400000/sved) = with the collating machine Collating 500000 = 1384*0.07x(500000/1000) - 1384+35 = 1419 Coubling 1400000 = 138470:07 x ( 1400000 /loer) = 1384 +99 21482 b. The automatic process becomes preferable to the manual when the monthly volume is over: => 1284 + 0.07 x [2/1000) = 9x (x/svoo) 1384 + 0.000ota- process 0.0018 0.0018 X-01000 ofa a 1384 1384 800000 0.00173 c. machine Midtown should lease the collating of the current monthly volume,

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