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In a project you have 3 alternatives with the following costs: Complete inhouse: The initial cost is 50.000 . A full-time engineer will be
In a project you have 3 alternatives with the following costs: Complete inhouse: The initial cost is 50.000 . A full-time engineer will be hired at an annual wage of 26.000 . Cost of production is 10 per product. Partial inhouse: Partial equipment has an initial cost of 35.000 . A part-time engineer has a wage of 10.000 . Due to partial outsourcing the production cost is 43 per product. Outsourcing: You don't have initial cost and you don't hire any engineer. You outsource all production and the cost is 120 per product. This project has a life of 6 years. If MARR is 10% determine the number of products that should be produced each year to justify: a) the complete inhouse b) the partial inhouse c) If you plan to produce 300 products, which method is the best economically?
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