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Samsung Electronics is trying to reduce supply chain risk by making more responsible make-buy decisions through improved cost estimation. A High-use component can be purchased

Samsung Electronics is trying to reduce supply chain risk by making more responsible make-buy decisions through improved cost estimation. A High-use component can be purchased for $25 per unit with delivery promised within a week. Alternatively, Samsung can make the component in-house and have it readily available at a cost of $5 per unit, if equipment costing $150,000 is purchased. Labor and other operating costs are estimated to be $35,000 per year over the study period of 5 years. Salvage is estimated at 10% of first cost and i = 12% per year. Which alternative do you recommend making or buying at the expected usage level 2713 units per year.

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