Question: 8. A manager is trying to decide whether to purchase a certain part or to have it produced intermally Internal production could use either of
8. A manager is trying to decide whether to purchase a certain part or to have it produced intermally Internal production could use either of two processes. One would entail a variable cost of $17 per mi and an annual fixed cost of $200,000; the other would entail a variable cost of $14 per unit and an annual fixed cost of $240,000. Three vendors are willing to provide the part. Vendor A has a prise of $20 per unit for any volume up to 30,000 units. Vendor B has a price of $22 per unit for demazi of 1,000 units or less, and $18 per unit for larger quantities. Vendor C offers a price of $21 per u for the first 1,000 units, and $19 per unit for additional units. a. If the manager anticipates an annual volume of 10,000 units, which alternative would be best from a cost standpoint? For 20,000 units, which alternative would be best? b. Determine the range for which each alternative is best. Are there any alternatives that are never best? Which? 10. A company must decide which type of machine to buy, and how many units of that type, given the following information
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