Sonys engineers inform Mark Gunther that a new facility soon to be fully operational within the supply chain of the company can actually produce the same circuit cards (of Problem 1). The unit manufacturing cost at this plant is estimated to be equal to $200 per card. The setup cost is equal to $700. The plant is scheduled to work for 250 days and has a daily demand of 120 cards (corresponding to an annual demand of 30,000) while having the capability of producing at a rate of 240 cards/day. As in the outsourcing alternative of Problem 1, the unit inventory holding cost is 30% of the unit manufacturing cost.

Based on the solutions above, which one yields a lower annual total cost, the purchasing or the manufacturing?Explain