1. The company Alpha forecasts a 5000 unit demand for the Sure-Hold model during the next quarter. This stapler is assembled from three major components: base, staple cartridge, and handle. Until now Alpha has manufactured all three components. However, the forecast of 5000 units is a new high in sales volume, and it is doubtful if the company will have sufficient production capacity to make all the components. The production time requirements per unit are as follows:

Department	Production time (hrs.)			Total available
	base	cartridge	handle
A	0.03	0.02	0.05	400
B	0.04	0.02	0.04	400
C	0.02	-.03	0.01	400

After considering Alpha overhead, material, and labor cost, the accounting department has determined the unit manufacturing cost for each component. These data, along with the purchase price quotations by the contracting firm are as follows:

Component	Manufacturing cost	Purchase cost
Base	0.75	0.95
Cartridge	0.40	0.55
Handle	1.10	1.40

• Determine the make-or-buy decision for Alpha that will meet the 5000-unit demand at a minimum total cost. How many units of each component should be made, and how many purchased?
• Which departments are limiting the manufacturing volume? If overtime could be considered at the additional cost of $3.00 per hour, which department(s) should be chosen for overtime? Explain.
• Suppose that up to 80 hours of overtime could be scheduled in department A. What would you recommend?