You are now tasked with the decision of purchasing a product from a supplier or making the product in house. Demand for the product is 12,500 units per week. Your plant can produce 19,500 units per week and incurs costs of $23.20 per unit and $940 per setup. Holding cost in either situation is 0.5% of unit cost per week and both the supplier and your plant operate 45 weeks out of the year. The supplier charges $300 per order, sells in batches of 250 units and offers the following quantity discounts:

a. Solely looking at buying using the quantity discounts, how much would you order, what cost per unit would you buy at, and what is the Total Annual Cost associated with that quantity? b. When comparing buying the product at the cost per unit chosen in part

(a) to making the product in-house, which would you choose: Buy or Make and why?

\begin{tabular}{|l|l|l|} \hline Cost per unit & Lower Quantity & Upper Quantity \\ \hline$25.00 & 0 & 4,999 \\ \hline$24.50 & 5,000 & 7,499 \\ \hline$24.00 & 7,500 & 9,999 \\ \hline$23.50 & 10,000 & \\ \hline \end{tabular}