A machine shop is negotiating with a potential customer on a job that would consist of producing 120,000 parts in the first year for a contracted...

A machine shop is negotiating with a potential customer on a job that would consist of producing 120,000 parts in the first year for a contracted price of $450,000. It is not known whether there would be a continuation of the job after that, so the shop must break even on the work during that first year. The engineering department has proposed an automated production line that would operate with an ideal cycle time of 1.50 min. It is anticipated that the line efficiency would be 80% and that average down time per line stop would be 7.0 min. Material cost will be $1.10 per starting work part and tooling cost is estimated at $0.25 per part. A 3% scrap rate must be planned for this job, so more than 120,000 parts must be processed to achieve the contracted quantity. Finally, to separate the good parts from the defectives, an inspection cost of $0.06 per part must be factored in. (a) How many hours would the line have to operate to produce the 120,000 parts? (b) During that time, how many breakdowns would occur? (c) Ignoring overhead costs, what is the maximum installed cost of the line for the shop to break even on the job.