Make or Buy?

In order to promote its new 'Green' supply chain strategy, EZworks is looking into producing the WOW3 chair in its own production shop. The production shop can produce 75 chairs per day. The production costs are expected to be OMR 89.5 per unit. The setup for a production run requires four hours, with a cost for labor and lost production time of OMR 145 per hour. Each day's production is delivered immediately to EZworks distribution center. 10. What is the optimal production run size if EZworks chooses to produce its own WOW3 chairs? (1)

11. How much storage capacity should the EZworks distribution center have available for the chairs being supplied from the production shop (each WOW3 packaged chair occupies a volume of 1.2 cubic meters)? (2)

12. How many production runs will be carried out for the WOW3 chairs each year? (1)

13. What is the duration of each production run? (1)

14. Would you recommend EZworks keep outsourcing the WOW3 chairs, or to produce them in their own production shop? Justify your response. (3)

In order to promote its new 'Green' supply chain strategy, EZworks is looking into producing the WOW 3 chair in its own production shop. The production shop can produce 75 chairs per day. The production costs are expected to be OMR 89.5 per unit. The setup for a production run requires four hours, with a cost for labor and lost production time of OMR 145 per hour. Each day's production is delivered immediately to EZworks distribution center. 10. What is the optimal production run size if EZworks chooses to produce its own WOW3 chairs? (1) 11. How much storage capacity should the EZworks distribution center have available for the chairs being supplied from the production shop (each WOW3 packaged chair occupies a volume of 1.2 cubic meters)? (2) 12. How many production runs will be carried out for the WOW 3 chairs each year? (1) 13. What is the duration of each production run? (1) 14. Would you recommend EZworks keep outsourcing the WOW3 chairs, or to produce them in their own production shop? Justify your response. (3)