Individual Case Problem 1 - Make or Buy decision Decision Component Bases Financial Cartridges Technician Cartridges Financial Tops Technician Tops Make Buy Used Cost Per Hour $9.00 Overtime Hours Resources Overtime Hours Manufacturing Hours Manufacturing Time (minutes) 1.00 3.00 2.50 1.00 1.50 Available 50 200 Total Cost Constrainrs Bases Financial Cartridges Technician Cartridges Financial Tops Technician Tops Overtime Hours Manufacturing Capacity LHS Relation = = = = = <= <= RHS Cost Per Unit Make Buy $0.50 $0.60 $3.75 $4.00 $3.30 $3.90 $0.60 $0.65 $0.75 $0.78 Demand 5000 3000 2000 3000 2000 Case Problem 1: A Make-or-Buy Decision The Janders Company markets various businesses and engineering products. Currently, Janders is preparing to introduce two new calculators: one for business market called the Financial Manager and one for the engineering market called the Technician. Each calculator has three components: a base, an electronic cartridge, and a face plate or top. The same base is used for both calculators, but the cartridges and tops are different. All components can be manufactured by the company or purchased from outside suppliers. The manufacturing costs and purchase prices per unit for the components are as follows. Component Manufacture (Regular Time) $0.50 3.75 3.30 0.60 0.75 Base Financial cartridge Technician cartridge Financial top Technician top Purchase $0.60 4.00 3.90 0.65 0.78 Janders' forecasters indicate that 3000 Financial Manager calculators and 2000 Technician calculators will be needed. However, manufacturing capacity is limited. The company has 200 hours of regular manufacturing time and 50 hours of overtime that can be scheduled for the calculators. Overtime involves a premium at the additional cost of $9 per hour. The manufacturing times (in minutes) per unit for the components are as follows. Component Base Financial cartridge Technician cartridge Financial top Technician top Manufacturing Time 1.0 3.0 2.5 1.0 1.5 Managerial Report Develop an approach to the problem that allows Janders to determine how many units of each component to manufacture and how many units of each component to purchase. Include a discussion of sensitivity analysis. Finally, discuss the solution of the problem by considering each of the following situations separately. a. Suppose that Janders' supplier lowers the price for the bases to $0.55 per unit. b. Suppose that the supplier of tops for the Technician calculator raises the unit price to $0.82. c. Suppose that Janders' employees were willing to work overtime for an overtime premium of only $2 per hour