Question: A manager is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of two

A manager is trying to decide whether to purchase a certain part or to have it produced internally. Internal production could use either of two processes. One would entail a variable cost of $15 per unit and an annual fixed cost of $260,000; the other would entail a variable cost of $17 per unit and an annual fixed cost of $207,000. Three vendors are willing to provide the part. Vendor A has a price of $20 per unit for any annual quantity up to 28,000 units. Vendor B has a price of $23 per unit if demand is 1,000 units or less, but $19 per unit (for all units) if demand is greater. Vendor C offers a price of $22 per unit for the first 1,000 units, and $20 per unit for additional units. a-1. If the manager anticipates an annual demand of 10,000 units, which alternative would be best from a cost standpoint? Vendor A Vendor B Vendor C Internal 1 Internal 2 a-2. If the manager anticipates an annual demand of 65,000 units, which alternative would be best from a cost standpoint? Vendor A and Internal 1 Vendor B and Internal 2 Vendor C and Internal 1 Vendor C and Internal 2 Vendor B and Internal 1 b-1. Determine the range for which each alternative is best? b-2. Are there any alternatives that are never best, If so, which ones? Internal 2 and Vendor B are never best. Internal 2 and Vendor C are never best. Internal 1 and Vendor A are never best
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