What is the best decision

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Reference no: EM133149437

Suppose that a manufacturer can produce a part for $25.00 with a fixed cost of $5,000. The the manufacturer can contract with a supplier in Asia to purchase the part at a cost of $30.00, which includes transportation. [Feel free to use Excel]

a) If the anticipated production volume is 1,500 units, compute the total cost of manufacturing and the total cost of outsourcing. What is the best decision?

b) Find the break-even volume and characterize the range of volumes for which it is more economical to produce or to outsource.

Reference no: EM133149437

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