Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

I need your help! A make-buy decision must be made for a component in a new product. Expected usage is 6,000 units per year, for

I need your help!

image text in transcribed

A make-buy decision must be made for a component in a new product. Expected usage is 6,000 units per year, for a study period of 8 years. The component can be purchased from a supplier for $C = 22 per unit, with delivery promised within a week. Alternatively, the component can be made in-house and be readily available, at a cost of $U = 5 per unit, if equipment costing $P = 148, 409 is purchased. Labor and other operating costs are estimated to be $O = 34, 071 per year. Salvage is estimated at 15% of the first cost. The MARR is 8% per year Neglect the element of availability. What is the break-even quantity for deciding whether to make or buy this component? A make-buy decision must be made for a component in a new product. Expected usage is 6,000 units per year, for a study period of 8 years. The component can be purchased from a supplier for $C = 22 per unit, with delivery promised within a week. Alternatively, the component can be made in-house and be readily available, at a cost of $U = 5 per unit, if equipment costing $P = 148, 409 is purchased. Labor and other operating costs are estimated to be $O = 34, 071 per year. Salvage is estimated at 15% of the first cost. The MARR is 8% per year Neglect the element of availability. What is the break-even quantity for deciding whether to make or buy this component

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions