A. BeevaCell-BTS is a telecom firm and mobile operator. The manufacturing of SIM-cards is currently outsourced to a Chinese company at AMD 199 per piece. The Chief Operations Officer (COO) of BeevaCell-BTS is contemplating the alternative of producing the SIM cards in-house. After receiving quotations from various suppliers of SIM-card making machines and making the necessary calculations, the COO has determined that the numbers for the best offer are:

Annual fixed cost = AMD 3,310,650

Variable cost per SIM = AMD 174

Using this information, determine the break-even quantity for which the BeevaCell-BTS would be indifferent between manufacturing the SIM cards in-house and outsourcing.

B.Some marketing firm has published a report on the telecom industry, according to which the demand forecast for BeevaCell-BTS new subscriptions (SIM-cards) is 123,500. If the COO trusts this forecast, should he/she make a decision to produce the SIM-cards in-house or purchase from the mentioned Chinese supplier?