Elmer Company is a lean manufacturer and is considering whether to buy a part that is needed for production of a value stream. The part is currently made within the value stream (the part is considered a materials cost). The revenue for the value stream is $2,000,000. Currently, the cost of materials is $850,000 and the cost of conversion is $430,000. If the company buys the part, the cost for materials would be $920,000 and the cost of conversion would be $390,000.

Required:
Explain whether the company should continue to make the part or buy the part from a vendor.