There are three alternatives available to meet the demand of a particular product. They are as follows: (a) Manufacturing the product by using process A (b) Manufacturing the product by using process B (c) Buying the product The details are as given in the following table: COST element Manufacturing the Manufacturing the Buy product by process A product by process B Fixed cost/year (Rs.) Variable/unit (Rs.) 5,00,000 6,00,000 175 150 Purchase price/unit (Rs.) 125 The annual demand of the product is 8,000 units. Should the company make the product using process A or process B or buy it?

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