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Outsourcing to AOP Increase capacity of existing factory 15 months for completion Time required Contract could be signed within 3 months-deliveries 1 month after that

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Outsourcing to AOP Increase capacity of existing factory 15 months for completion Time required Contract could be signed within 3 months-deliveries 1 month after that $500 Variable cost per blade Contracted price per blade $570 Transport cost per 10 blades $200 Additional annual fixed costs $600 000 $6 million $6 million Annual fixed costs of existing CJE factory Annual capacity 5000 3000 (a) Refer to Table 1. Calculate the difference in unit cost between the two supply options for turbine blades. [6]

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