Supplier A has old equipment that produces at the rate of 10,000 per hour. Supplier B has equipment that produces at the rate of 20,000 per hour and supplier C has new equipment that produces at 40,000 per hour. You need 60,000 pieces. Each supplier uses the same amount of labor per hour. Disregarding the cost of capital, which supplier should give you the lowest price?

Answer 1

I'd hope it would be the supplier with the fastest equipment. Labor at 40,000 pieces per hour is much less than the others.