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Buy or Make Example A company has been buying a product from a supplier for 4 years. The supplier has a fixed unit price of
Buy or Make Example A company has been buying a product from a supplier for 4 years. The supplier has a fixed unit price of $15/unit for the remainder of the 10 year contract. The company could make the product themselves. The machine would cost $25,000, and will last for 6 years. At the end of the 6 years, the machine will have a salvage value of $2,000. Operating costs per year is $2,000 and maintenance costs are $750 a year. The company needs 1500 units a year, and if the MARR is 20%, should they buy or make
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