A company has the option of purchasing a good or manufacturing the item. If the item is
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A company has the option of purchasing a good or manufacturing the item. If the item is purchased, the company will be charged $20 per unit plus a cost of $4 per order. If the company manufactures the item, it has a production capacity of 8,000 units per year. It costs $50 to set up a production run, and annual demand is 4000 units per year. If the annual holding cost is 20% and the cost of manufacturing one unit is $18, determine whether the company should purchase or manufacture the item based on total costs given.
Related Book For
Business Statistics
ISBN: 978-0321925831
3rd edition
Authors: Norean Sharpe, Richard Veaux, Paul Velleman
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