=c. Another way to compare these two options is to find a break-even point for the production
Question:
=c. Another way to compare these two options is to find a break-even point for the production and sales volume, below which the buy option is better and above which the make option is better. Begin this process by developing an expression for the difference in profit between the make and buy options in terms of the number of grandfather clocks to produce for sale. Thus, this expression should give the incremental profit from choosing the make option rather than the buy option, where this incremental profit is 0 if 0 grandfather clocks are produced but otherwise is negative below the break-even point and positive above the break-even point. Using this expression as the objective function, state the overall mathematical model (including constraints) for the problem of determining whether to choose the make option and, if so, how many units of the time-keeping mechanism (one per clock) to produce.
Step by Step Answer:
Introduction To Management Science A Modeling And Case Studies Approach With Spreadsheets
ISBN: 9780078096600
4th Edition
Authors: Frederick S. Hillier And Mark S. Hillier