Question: 0 0 E5.3 (LO 3), AP Gino's Pizza has been making its own pizza sauce since it opened in 1985. Gino's advertises the freshness
0 0 E5.3 (LO 3), AP Gino's Pizza has been making its own pizza sauce since it opened in 1985. Gino's advertises the freshness of its sauce it's made from scratch daily. But making sauce from scratch takes time, and Gino's has a hard time maintaining staffing levels. Because of these challenges, Gino's is considering outsourcing its sauce. More information regarding its options to make or buy is provided below. 6 Make Buy DM for one batch $25 DL for one batch 20 Variable-MOH for one batch 5 Fixed-MOH for one batch 8 Cost to buy $3.50 per gallon 4 Required Quantity per batch or quantity to purchase 12 gallons 12 gallons a. Calculate the relevant cost per gallon to continue making each batch of sauce and compare it with the cost of outsourcing. None of the fixed-MOH will be avoided if Gino's buys instead of makes the sauce. b. Which is the most cost-effective option for Gino's? Is that the option you believe Gino's should select? Why or why not? c. Recognize any important considerations that were not explicitly outlined above in regard to this decision. Explain how each of these may impact Gino's decision.
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