Frequently the manager of an inventory system must take the decision whether to purchase or manufacture an item. Suppose that an item may be purchased for $$25$per unit and manufactured at the rate of $10,000$ units per year for $$22$ each. However, if purchased the ordering cost is only $$5$ compared to a setup cost of $$50$ if it is manufactured. The yearly demand for this item is $2,500$ units and the inventoryholding cost rate is $10$ percent. Which is more economical to make or buy the item?