Final answer:
The question requests the calculation of the Economic Production Lot for Durango Castings, considering their capacity and costs, which requires weighing setup against holding costs. However, not all the necessary data is provided to perform the computation. Discussions on labor versus machines and economies of scale provide context on cost-efficiency decisions within production.
Step-by-step explanation:
The question asks to determine the Economic Production Lot (EPL) for Durango Castings company, based on the information provided about their production capacity, costs and the holding cost. Given that the company needs to deliver 1,450 pump housings per week for a year, and their machine has a capacity of 4,500 units per week, with a setup cost of $250 and production costs of $21.50 per unit, the holding cost being 24 percent per year, the EPL would be calculated considering the trade-off between the setup costs and the holding costs to find the most cost-efficient production batch size. However, the question doesn't provide all data points needed to calculate EPL, such as demand rates or specifics on how the holding costs translate to per-unit costs over time.
In the context of choosing between labor and machines, firms might adjust their manufacturing strategies based on labor costs and the comparative expense of using physical capital to achieve increased labor productivity and cost efficiency. The decision can be influenced by factors such as labor strikes and economic considerations like those related to economies of scale as illustrated by the per-unit cost differences in production plants of different sizes.