Decision Making and Relevant Costs at Amazon

Values:

• Internal Production Cost: $10 per unit
• Outsourcing Cost: $8 per unit
• Quality Control Cost: $1 per unit

Requirements:

1. Perform a make-or-buy analysis to determine the most cost-effective option for Amazon.
2. Calculate the total relevant costs for both options.
3. Recommend whether Amazon should produce internally or outsource based on cost analysis.