Question: An item may be purchased for $ 2 5 per unit or manufactured at a rate of 1 0 , 0 0 0 units per

An item may be purchased for $25 per unit or manufactured at a rate of 10,000 units per year for $23. If purchased, the order cost will be $5, compared to a $50 setup cost for manufacture. The annual demand for the item is 2,500 units, and the holding cost fraction is 10%.Should the item be purchased externally or produced internally?

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