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[3] The AGGie Industrial Entrepreneurs (AGGIE) manufacture customized business card holders (BCHS) using their several lines of additive manufacturing machines (aka 3-D printers). The
[3] The AGGie Industrial Entrepreneurs (AGGIE) manufacture customized business card holders (BCHS) using their several lines of additive manufacturing machines (aka 3-D printers). The IISE student chapter has offered to produce the BCHS at a unit price of $24/BCH as long as the order is for at least 500 units. The lead ISEN for AGGIE has estimated the expected demand to be 1000 BCH units each year over the next 5 years. If AGGIE decides to manufacture the BCHS themselves they will investment in a new 3-D printer that will cost $5,800 and will have a salvage value of $500 after 5 years. Unit production cost is estimated in the table below. The AGGIE firm CFO has identified a MARR of 12% for assessing economic investment decisions. Find the following: Direct material Direct labor $3.50 $10.00 Variable factory overhead $3.80 Fixed factory overhead $4.20 Total unit cost $21.50 (a) Draw the cash flow diagram for the make option (b) Calculate AEC (12%) for the AGGIE make option (c) Calculate the unit cost for the AGGIE make option (d) Should AGGIE make or buy?
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