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Jubail Oil and Gas is deciding to manufacture CNG cylinder in their own facility in Jubail, while the same cylinders were purchased from Saudia Engineering
Jubail Oil and Gas is deciding to manufacture CNG cylinder in their own facility in Jubail, while the same cylinders were purchased from Saudia Engineering located in Riyadh. Saudia Engineering offered the cylinders at a price of SAR per unit which included the production and transportation cost for a minimum order to cylinders. As the demand was increasing Jubail Oil and Gas estimated that the cost of manufacturing in their own facility in Jubail would incur a fixed cost of SAR and a variable cost of SAR to meet the demand.
a Determine the range of quantity that is economical either to purchase from Saudia Engineering or produce at their own location in Jubail facility.
b Illustrate the crossover point using a graph.
c What is your decision, either to purchase from Riyadh or produce at their Jubail location for a quantity of and cylinders?
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