Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1 . Jubail Oil and Gas is deciding to manufacture CNG cylinder in their own facility in Jubail, while the same cylinders were purchased from

1. Jubail Oil and Gas is deciding to manufacture CNG cylinder in their own facility in Jubail, while the same cylinders were purchased from Saudia Engineering located in Riyadh. Saudia Engineering offered the cylinders at a price of 40 SAR per unit which included the production and transportation cost for a minimum order to 2000 cylinders. As the demand was increasing Jubail Oil and Gas estimated that the cost of manufacturing in their own facility in Jubail would incur a fixed cost of 45,000 SAR and a variable cost of 25 SAR to meet the demand.
a. Determine the range of quantity that is economical either to purchase from Saudia Engineering or produce at their own location in Jubail facility.
b. Illustrate the crossover point using a graph Graph

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these General Management questions