Finding production costs, Samco producing has always buy a

Finding production costs

Reference no: EM1345749

Samco Manufacturing has always purchased a certain component part from a supplier on the East Coast for $50 per part. The supplier is reliable and has maintained the same price structure for years. Recent improvements in operations and reduced product demand have cleared up some capacity in Samco's own plant for producing component parts. The particular part in question can be produced at $20 per part, with an annual fixed investment of $27,000.

a) Over what range (quantity) of product would each production option be preferred?

b) As an alternative, a new supplier located nearby is offering to produce parts on the following cost schedule. For the first 100 parts, the cost is $52 per part. For each part in excess of 100, the cost per unit drops to $45 per part. Considering just the two suppliers, over what range (quantity) of product would each supplier by preferred?

Reference no: EM1345749

Questions Cloud

Determine expected and required return : Assume Rf is 5% and Rm is 10 percent. According to the SML and the CAPM, an asset with a beta of -2.0 has a required return of negative 5 percent.

Explain how can i include costs : Setting up costs in Microsoft Project 2000 for project management - Explain how can I include costs?

What is the work function of the metal : A circuit contains six 210 lamps and a 14 heater connected in parallel. The voltage across the circuit is 120V. If the circuit has a 12A fuse, will the fuse melt if all the lamps and the heater are on.

Illustrate what is the graph among utility and income : Illustrate what is the graph among utility and income,when marginal utility of income increases or deminishes.

Finding production costs : Samco producing has always buy a certain component part from supplier on the East Coast for dollar 50 per part. The supplier is reliable & has maintained the same value structure for years.

Explaining the situation in program : Which of the following best explains the situation after Line 1 has been executed?

How various interference fringes are observed per centimeter : If air resistance is negligible, using energy considerations alone, how fast must the ball be going after it falls 200 meters.

Describe form of the supplier''s optimal policy : Explain the form of the supplier's optimal policy in the absence of demand information sharing - Production Management

Question on interest rate parity : Suppose that interest rate parity holds. In both the spot market and the 90-day forward market 1 Japanese yen = 0.0086 dollar. And 90-day risk-free securities yield 4.6% in Japan.

User Account

All Pages