A software development firm is contemplating outsourcing its customer support

operations to a call center in another country. The current annual fixed cost of running

an in$-$house customer support center is $$180,000,$ and the variable cost per customer

interaction is $$5.$ The outsourcing contract would cost the firm $$13$ per customer

interaction. Calculate the breakeven point between outsourcing and doing it themselves.

If they need to produce $1$ unit less than that number, is it cheaper to do it themselves or

outsource it$?$

Practice Problem $3$:

A retail company is evaluating whether to outsource its product distribution to a third$-$

party logistics provider. The fixed costs of maintaining its own distribution network

amount to $$300,000$ per year, while the variable cost per unit shipped is $$4.$ The logistics

provider offers to handle the distribution for $$6$ per unit shipped. Calculate the

breakeven point between outsourcing and maintaining their own distribution. If they

need to distribute $1$ unit more than that number, is it cheaper to do it themselves or

outsource it$?$

Practice Problem $4$:

A call center is contemplating outsourcing its IT support services to an offshore

provider. The current annual fixed costs for the in$-$house IT department are $$150,000,$

and the variable cost per IT support request is $$21.$ The outsourcing agreement would

cost $$15$ per support request. Calculate the breakeven point between outsourcing and

doing the calls themselves. If they need to support $1$ call less than that number, is it

cheaper to do it themselves or outsource it$?$