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A large global automobile manufacturer is considering outsourcing the manufacturing of a solenoid used in the transmission of its SUVs. The company estimates that annual fixed costs of manufacturing the part in-house, which include equipment, maintenance, and management, amounts to $6.7 million. The variable costs of labor and material are $7.75 per unit. The company has a offer from a major subcontractor to produce the part for $9.75 per unit. However, the subcontractor wants the company to share in the costs of the equipment. The automobile company estimates that the total cost would be $2.7 million, which also includes management oversight for the new supply contact. a. How many solenoids would the automobile company need per year to make the in-house option least costly? The company must consume solenoids to make the manufacturing the part in-house option least costly. (Enter your response rounded to the nearest whole number.)

A large global automobile manufacturer is considering outsourcing the manufacturing of a solenoid used in the transmission of its SUVs. The company estimates that annual fixed costs of manufacturing the part in-house, which include equipment, maintenance, and management, amounts to $6.7 million. The variable costs of labor and material are $7.75 per unit. The company has a offer from a major subcontractor to produce the part for $9.75 per unit. However, the subcontractor wants the company to share in the costs of the equipment. The automobile company estimates that the total cost would be $2.7 million, which also includes management oversight for the new supply contact. a. How many solenoids would the automobile company need per year to make the in-house option least costly? The company must consume solenoids to make the manufacturing the part in-house option least costly. (Enter your response rounded to the nearest whole number.)

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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A large global automobile manufacturer is considering outsourcing the manufacturing of a solenoid used in the transmission of its SUVs. The company estimates that annual fixed costs of manufacturing the part in-house, which include equipment, maintenance, and management, amounts to $6.7 million. The variable costs of labor and material are $7.75 per unit. The company has an offer from a major subcontractor to produce the part for $9.75 per unit. However, the subcontractor wants the company to share in the costs of the equipment. The automobile company estimates that the total cost would be $2.7 million, which also includes management oversight for the new supply contact. a. How many solenoids would the automobile company need per year to make the in-house option least costly? The company must consume View an example Get more help. Q solenoids to make the manufacturing the part in-house option least costly. (Enter your response rounded to the nearest whole number.) & + ( < ) 0 Clear all Check answer + delete
Transcribed Image Text:A large global automobile manufacturer is considering outsourcing the manufacturing of a solenoid used in the transmission of its SUVs. The company estimates that annual fixed costs of manufacturing the part in-house, which include equipment, maintenance, and management, amounts to $6.7 million. The variable costs of labor and material are $7.75 per unit. The company has an offer from a major subcontractor to produce the part for $9.75 per unit. However, the subcontractor wants the company to share in the costs of the equipment. The automobile company estimates that the total cost would be $2.7 million, which also includes management oversight for the new supply contact. a. How many solenoids would the automobile company need per year to make the in-house option least costly? The company must consume View an example Get more help. Q solenoids to make the manufacturing the part in-house option least costly. (Enter your response rounded to the nearest whole number.) & + ( < ) 0 Clear all Check answer + delete
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