Samsung Electronics is trying to reduce supply chain risk by making more responsible make-buy decisions through improved cost estimation. A high-use component (expected usage is 5000 units per year) can be purchased for 25 birr per unit with delivery promised within a week. Alternatively, Samsung can make the component in-house and have it readily available at a cost of $5 per unit, if equipment costing 150,000 birr is purchased. Labor and other operating costs are estimated to be 35,000 birr per year over the study period of 5 years. Salvage is estimated at 10% of first cost and i=12% per year. Neglect the element of availability (a) to determine the breakeven quantity and (b) to recommend making or buying at the expected usage level.

Answer rating: 100% (QA)

step 1 Solve the relation AWbuy AWm... View the full answer