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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 $9 each or to produce them in-house. Either of two processes could be used for the in-house production. Production Option One would have an annual fixed cost of $60,000 and a variable cost of $5 per unit. Production Option Two would have an annual fixed cost of $100,000 and a variable cost of $4 per unit. Determine the range of annual production for which each of the alternatives would be best.

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Operation Management, Management Studies

Category:- Operation Management
Reference No.:- M9351443

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