Critical component for its new line of electric watercraft

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Reference no: EM132299625

The operations manager at Sebago Manufacturing is considering three proposals for supplying a critical component for its new line of electric watercraft. Proposal one is to purchase the? component, proposal two is make the component? in-house using rebuilt? equipment, and proposal three is to purchase? new, highly automated equipment. The costs associated with each proposal are provided in the table below. At what quantity range will each option be? preferred?

Proposal Annual cost of capital required Variable cost of each component

One: purchase $0.00 $25.00

Two: make with rebuilt equipment $150,000.00 $17.00

Three: make with new equipment $425,000.00 $15.00

Reference no: EM132299625

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