The manager of a fast-food restaurant featuring hamburgers is adding salads to the menu. For each of the twonew options, the price to the customer will be the same. The make option is to install a salad bar stocked withvegetables, fruits, and toppings and let the customer assemble the salad. The salad bar would have to be leasedand a part-time employee hired. The manager estimates the fixed costs at $12,000 and variable costs totaling$1.50 per salad. The buy option is to have preassembled salads available for sale. They would be purchasedfrom a local supplier at $2.00 per salad. Offering preassembled salads would require installation and operation ofadditional refrigeration, with an annual fixed cost of $2,400. The manager expects to sell 25,000 salads per year.What is the make-or-buy quantity?
The manager of a fast-food restaurant featuring hamburgers is adding salads to the menu. For each of the two
new options, the price to the customer will be the same. The make option is to install a salad bar stocked with
vegetables, fruits, and toppings and let the customer assemble the salad. The salad bar would have to be leased
and a part-time employee hired. The manager estimates the fixed costs at $12,000 and variable costs totaling
$1.50 per salad. The buy option is to have preassembled salads available for sale. They would be purchased
from a local supplier at $2.00 per salad. Offering preassembled salads would require installation and operation of
additional refrigeration, with an annual fixed cost of $2,400. The manager expects to sell 25,000 salads per year.
What is the make-or-buy quantity?
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