1. [30] Assume you work in a procurement department of a renowned company. The procurement manager asks you to recommend a make/buy decision on a major subassembly that is currently purchased externally for a total of $3.9 million this year. This cost is expected to remain the same for the next 6 years. Your manager asks that both direct and indirect costs be included in the in-house manufacturing evaluation (the make alternative). The new equipment will cost $3 million, have a salvage of $0.5 million, and a life of 6 years. Estimates of materials, labor costs, and other direct costs are $1.5 million per year. Typical indirect rates and bases are given in the table below. Department Basis A Direct labor cost $2.40 per unit ($) direct labor cost Rate B Material cost $0.50 per unit ($) material cost Number of inspections $20 per inspection The following information is also given. Direct labor cost in Department A is $250,000 per year Materials cost in Department B is $210,000 per year Total number of inspections in Department C is 4,500 per year = Perform the AW (annual worth) evaluation at MARR 10% per year over a 6-year study period, and decide if the make or buy decision is preferred