Assume you are a cost analyst at Amazon, evaluating whether to make or buy a component used in the production of Kindle devices. The following data is available:

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  • Cost to make internally: $50 per unit
  • Cost to buy externally: $45 per unit
  • Annual demand: 10,000 units Calculate the total cost for each option and determine whether Amazon should make or buy the component. Present your calculations in a paragraph format, and discuss the qualitative factors that should be considered in the decision-making process.