QUESTION $21(10$ points$)-$ Producing or Outsourcing

A bank is considering two alternatives for handling its projected number of service calls in the

next decade $($you can consider this as one period$).$ If the bank sets up its own service call center

in the U$.$S$.,$ the fixed cost is estimated to be $$2,500,000\mathrm{.}00,$ and the variable cost is calculated to

be $35$ cents per call. If the call service is outsourced to a foreign company, the fixed cost would

be $$120,000\mathrm{.}00,$ and the unit charge would be $52$ cents per call.

In the following calculations, monetary values should be in dollars and have $2$ decimal

places, and volumes of calls should be rounded up to whole numbers if necessary.

$($a$)[2]$ What is the break$-$even number of service calls?

$($b$)[2]$ Draw a diagram representing the in$-$house and outsourcing total costs which are functions

of the number of service calls. Indicate the break$-$even number of service calls on the diagram.

$($c$)[3]$ If the projected volume is $13,000,000$ calls, would the bank set up its own service call

center or outsource service call handlings? Explain your answer with cost calculations and show

the results in the sketch of part $($b$).$

$($d$)[3]$ If the projected number of service calls is $15,000,000,$ would the bank change its decision

in part $($c$)?$ Again, explain with calculations and show the results in the sketch of part $($b$).$