A Company currently manufactures a certain part. The annual production costs for 5,000 parts are as follows:

Material Cost $5 per unit

Labor Cost $4 per unit

Overhead $1 per unit

Batch level set up costs for the year $5,000

Product level manager's salary $18,000

Allocated facility level costs $12,000

A supplier has offered to provide 5,000 units of the component for $13 each. If the company outsources the part production, it will be able to rent out the idled factory space for $1,000 per month and terminate the product manager.

A certain product is shipped in lots of 1000. The acceptance sampling procedure uses randomly 20 parts with acceptance number of 2. If p0 is 0.01 and p1 is 0.08, what are the producers and consumers risks? What are your recommendations?