The supply manager at a dishwasher manufacturer is assessing the company should purchase the pump from a supplier or assemble the pump in-house. Forecasts suggest that 15,000 pumps are needed per year. The annual fixed costs to assemble the pumps are$120,000 per year. The variable costs per unit to assemble the pump are $25/unit. The pumps can be purchased for $30/unit. Does the cost analysis support insourcing or outsourcing pump assembly?
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