Your firm is contemplating making a part in-house, for use in a product your company manufactures.Currently ,
Question:
Your firm is contemplating making a part in-house, for use in a product your company manufactures.Currently , your company buys the part for $26 from a reliable supplier. The required quantity is 12,000 parts over the expected life of the product your company sells. One alternative would be to purchase a semi-automated machine at a cost of $38,000 which could make the part for $20. A second alternative would be to buy a fully automated machining center for $95,000 which could make the part for $17. Over what range would each alternative be preferred? What should your company do?
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