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David is trying to decide if it makes sense to outsource the purchasing function. He has a chain of 1 2 restaurants and employs two

David is trying to decide if it makes sense to outsource the purchasing function. He has a chain of 12 restaurants and employs two buyers at an annual fixed cost of $85,000. David estimates that the variable cost of each purchase order placed is $15. An outsourced company will perform the purchasing function for a fixed annual fee of $100,000 plus $5 for each purchase order placed. Last year, David placed 1400 purchase orders. (show your work)
What was the in-house purchasing cost last year?
What would the cost be if outsourced?
If David estimates it will place 1800 purchase orders next year, should David outsource?

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