Question: Saber Electronics has been making components for its navigation systems for years. The company is currently in the process of deciding whether it should purchase

Saber Electronics has been making components for its navigation systems for years. The company is currently in the process of deciding whether it should purchase the components from others. Inhouse production includes a fixed annual cost of $15,000 and a variable cost of $4.50 per unit (including labor, material, and overhead). One supplier has agreed to offer a unit cost of $5.50, but it will also charge a shipping cost of $0.50 per unit. What is the indifference point between making and buying the components and over what demand range is each option best?

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