Question: Make or Buy?) Bell Computer is considering to subcontract the production of a motherboard that is used in one of the company's popular computers to

Make or Buy?) Bell Computer is considering to subcontract the production of a motherboard that is used in one of the company's popular computers to an overseas company. Hence, they need the help of an ASU IE graduate to compare the annual costs of two options: produce internally or buy from the overseas company. The annual demand for the motherboards is 30,000 units, and the operations of Bell Computer cannot tolerate any shortages. The holding costs are based on a 25% annual interest rate. (a) If this specific motherboard is produced internally, it will cost $ 980 each time the machines are setup for a production run. The unit production cost is estimated to be around $75 by the accounting department. Bell Computer can produce the motherboard at a rate of 50,000 per year. i. Calculate the economic production lot size for the internal production option. ii. What is the length (i.e., duration) of each production run

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Mathematics Questions!