The Water Sports Company6 soon will be producing a new model line for the motor boats. The production manager, Michale Jensen, now is facing a "MAKE-OR-BUY DECISION" regarding thhe outboard motor to be installed on each of these boats.

Based on the total cost involved, should the motors be produced internally or purchased from a vendor? Producing them internally would require an investment of $1 million in new facilities as well as production cost of $1,600 for each of motor produced.

If purchased from a vendor instead, the price would be $2,000 per motor.

Michael has obtained a preliminary forecast from the company's marketing division that 3,000 boats in this model will be sold.

1.) Use spreadsheets to display and analyze Michael's two options

1.a) Which option should be chosen? 1.b) Why is your chosen option better for the problem?

2. Michael realizes from past experience that preliminary sales forecast are quite unreliable, so he wants to check on whether his decision might change if a more careful forecast differed significantly from the preliminary forecast. 2.a) Determine the BREAK-EVEN POINT for the production and sales volume below which the buy option is better and above which the make option is better.