Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

8. Henri of Henris French Cuisine (HFC), a chain of 12 restaurants, is trying to decide if it makes sense to outsource the purchasing function.

8. Henri of Henris French Cuisine (HFC), a chain of 12 restaurants, is trying to decide if it makes sense to outsource the purchasing function. Currently, Henri employs two buyers at an annual fixed cost of $85,000. Henri estimates that the variable cost of each purchase order placed is $15. Value-Buy (VB), a group of purchasing specialists, will perform the purchasing function for a fixed annual fee of $100,000 plus $5 for each purchase order placed. Last year, HFC placed 1450 purchase orders. a) What was the cost last year to HFC when doing the purchasing in-house? b) What would the cost have been last year had HFC used Value-Buy? c) What is the indifference point for the two alternatives? d) If HFC estimates it will place 1600 purchase orders next year, should it use VB?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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 Finance questions

Question

What are five different ways imagery can be used by athletes?

Answered: 1 week ago