Sydney Electronics markets a unique Bluetooth speaker model in

Australia, with a yearly sales figure of $1,690$ units. The demand is steady

and evenly spread over the year. The company currently outsources its

speaker production to a local supplier at a cost of $$20$ per unit. Each

shipment incurs a fixed cost of $$1,000.$ Sydney Electronics insures each

speaker in stock at a rate of $10\%$ of its purchasing cost if it is held for the

entire year. Insurance costs decrease proportionally with shorter storage

durations.

The firm is contemplating manufacturing the speakers internally. This

would involve leasing equipment for $$9,600$ annually. Starting a

production cycle would cost $$600$ for setup and cleaning. Operating

continuously, the production line could output $8,000$ units annually. The

per$-$unit production cost would be $$15,$ covering materials and energy. It's

assumed the insurance costs of in$-$house produced speakers would match

that of the outsourced ones $(10\%$ of their production cost$).$

The company has a warehouse with a $800-$unit capacity but can rent

additional space if needed$$one warehouse for $$200$ a year holds $300$

units, and another, more modern one for $$300$ a year also holds $300$ units.

Disposing of unsellable speakers is not considered an option.

As a consultant for Sydney Electronics, your task is to evaluate the

different production and procurement strategies available. Your report

should detail your assumptions, methodologies, findings, and advice,

focusing on a financial comparison of the options. Conclude with a brief

discussion of your analysis.