Marine International manufactures an aquarium pump and is trying to decide whether to produce the filter system
Question:
Marine International manufactures an aquarium pump and is trying to decide whether to produce the filter system in-house or sign an outsourcing contract with Bay front Manufacturing to make the filter system. Marine's expertise is producing the pumps themselves but they are considering producing the filter systems also. To establish a filter system production area at Marine International, the fixed costs is $300,000 per year and they estimate their variable cost of production in-house at $12.25 per filter system. If Marine outsources the production of the filter system to Bay front, Bay front will charge Marine $30 per filter system. Should Marine International outsource the production of the filter system to Bay front if marine sells 25,000 pumps a year?
Step by Step Answer:
OM6 operations supply chain management
ISBN: 978-1305664791
6th edition
Authors: David Alan Collier, James R. Evans