You are the supply chain manager of a car manufacturer. Your

firm has the option to make or buy a component for its new

engine. A supplier is able to supply the part at $$8$ per unit. Your

firm estimates that it costs $$1000$ to prepare the contract with

the supplier. To make the part, your firm must invest $$28,000$ in

equipment and your firm estimates that it costs $$5\mathrm{.}5$ per unit to

make the part.

A$.)$ What is the break$-$even point?

B$.)$ If the annual requirement is $20,000$ units, would you

recommend your company to make or buy the

component?

C$.)$ If the annual requirement is $8,000$ units, would you

recommend your company to make or buy the

component?

Assignment $1$: Make or Buy?