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A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a
A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor at $ each or to produce them inhouse. Either of two processes could be used for inhouse production; Process A would have an annual fixed cost of $ and a variable cost of $ per unit, and Process would have an annual fixed cost of $ and a variable cost of $ per unit. Determine the range of annual volume for which each of the alternatives would be best. Round your first answer to the nearest whole number. Include the indifference value itself in this answer.
For annual volumes of
or less,
purchase from the vendor
is best. For annual volumes above that amount,
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