4. ABC Engineering has received a one-time contract to design and build 10,000 units of a new product. During the proposal process, management felt that the new product could be designed and manufactured at a low cost. One of the ingredients necessary to build the product was a small component that could be purchased for Rs.60 in the marketplace. Accordingly, management budgeted Rs.650,000 for the purchasing and handling of 10,000 components. During the design stage, your engineering team informs you that the final design will require a somewhat higher-grade component that sells for Rs.72. The new price is substantially higher than you had budgeted for. This will create a loss. You meet with your manufacturing team to see if they can manufacture the component a cheaper price than buying it from the outside. Your manufacturing team informs you that they can produce a maximum of 10,000 units, just enough to fulfill your contract. The setup to produce the new component will be Rs.100,000 and the raw material cost is Rs.40 per component. Since ABC has never manufactured this product before, manufacturing expects some defects as well. All defective parts must be removed and repaired at a cost of Rs.120 per part. I. As per the above information, is it economically better to make (produce?) the component or buy the component? (10 marks) Strategically thinking, what might be the best decision they should take? (15 marks)