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A firm is evaluating the alternative of manufacturing a part that is currently being outsourced from a supplier. The relevant information is as follows:

For in-house manufacturing:

Annual fixed cost = $100,000

Variable cost per part = $140

For purchasing from supplier:

Purchase price per part = $160

a. Using this information, find the best decision if the demand is 4,000.

b. Determine the break-even quantity for which the firm would be indifferent between manufacturing the part in-house or outsourcing it. please compute so I may have a clear understanding on how to do this problem.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M93101334

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