Assignment - Make or Buy

Make or Buy- Unit 4 notes

Sheila is the project manager for an IT project to develop a software system. She calculates that the in-house solution will cost the company $2000 to create the software package and $100 per month to maintain the software. Mark, the buyer for the project informs Sheila that it would cost $1500 to purchase the software. The supplier requires an extra $1000 to make some changes to the software to fit with the project requirements. He is also asking for a $140 monthly maintenance fee.

1. What is the difference between making the software and buying it? (without maintenance fees)
2. What is the difference in supporting the software per month.
3. If the software is to be replaced after one year, is it better to buy or make this software?
4. How much would they save by following your suggestion?

Based on the above case, please graph make and buy Total Cost (TC) at Q zero, Q equalization and Q 2,500 days using the provided graph. Make sure you clearly and accurately label the requested points on your graph (assume an average of 30 days per month, Q is in days and TC is CAD).