What is the correct formula to use to compare these options? Which options would be best for: I. 10,000 units? ii. 20,000 units? iii. 100,000 units? What is the value in considering these options across three very different demand values ranging from 10,000 to 100,000 units?
At Fraser engineering. Erix is trying to decide whether to purchase a certain part to to have it produced internally. Internal production could use either of two processes. One would entail a variable cost per unit of $17, and an annual fixed cost of $240,000. Three vendors are willing to provide the part.
Vendor A has a price of $20 per-unit for any volume up to 30,000 units
Vendor B has a price of $22 per-unit for demand of 1,000 units or less, and $18 per-unit for larger quantities.
Vendor C offers a price of $21 per-unit for the first 1,000 units, and $19 for each additional unit.
What is the correct formula to use to compare these options?
Which options would be best for:
I. 10,000 units?
ii. 20,000 units?
iii. 100,000 units?
What is the value in considering these options across three very different demand values ranging from 10,000 to 100,000 units?
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