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A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor for $6.60 each or to produce them in house. There are two in house options.

Option 1 would have an annual fixed cost of $161000 and a variable cost of $5.60.

Option 2 would have an annual fixed cost of $192000 and a variable cost of $3.70.

Calculate the maximum quantity that would have the manager select purchasing the motors from the vendor.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M92508874

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