Question: Make or Buy Decision with a limiting factor: 3. The availability of Material B is limited to 8,000 kg Product X Y Z Demand (units)

Make or Buy Decision with a limiting factor:

3. The availability of Material B is limited to 8,000 kg

Product X Y Z

Demand (units) 2,000 2,500 4,000

Variable cost to make ($ per unit) 10 12 14

Buy-in price ($ per unit) 13 17 16

Kg of B required per unit 3 2 1

(included in variable cost)

Which products should the company make and which should it buy?

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