What is the break-even order quantity

Assignment Help Management Theories

Reference no: EM131462969

Question: Suppose the supplier of keyboards described in Example is willing to offer the following incremental quantity discount schedule:

601_Cost 1.png

Determine the cost to the firm for order quantities in increments of 20,000 for Q = 200,000 to Q = 1,000,000, and compare that to the cost to the firm of producing internally for these same values of Q. What is the break-even order quantity?

2221_1.111.png

Example: A large international computer manufacturer is designing a new model of personal computer and must decide whether to produce the keyboards internally or to purchase them from an outside supplier. The supplier is willing to sell the keyboards for $50 each, but the manufacturer estimates that the firm can produce the keyboards for $35 each. Management estimates that expanding the current plant and purchasing the necessary equipment to make the keyboards would cost $8 million. Should they undertake the expansion?

Reference no: EM131462969

Questions Cloud

How you could accommodate group members diverse values : Describe how you could accommodate group members' diverse cultural backgrounds, values, and styles as they relate to these goals and methods.

How does one article help you understand : How does one article help you 're-read' the other and How does one article help you better understand the other - Which specific arguments from the articles do

Write a memo describing your understanding of decisions : Describe criteria that would determine whether the manager is making good decisions. What should be done to better assure that you are making a good?

What are your own reactions to conflict : What are your own reactions to conflict? How will this influence your ability to help members recognize and work through conflicts?

What is the break-even order quantity : Suppose the supplier of keyboards described in Example is willing to offer the following incremental quantity discount schedule.

How could the use of role plays among group members : How could the use of role plays among group members facilitate the goals of early and transition stage groups? What purpose could role plays serve?

What was the objective of your control treatment- plan : Applying your understanding of the concept of Controlling Risks, please share at least two risks that you have identified in completion of a job tasks.

Develop the company branding and pricing strategy : Develop the company's branding, pricing, and distribution strategy. Classify the company's major competitors as inter- or intra-competitors

What are the pitfalls to combining differentiation : Explain 3 main generic strategies. Is it possible to combine these strategies? What are the pitfalls to combining differentiation and overall cost leadership?

User Account

All Pages