Business Analytics
Business Analytics
3rd Edition
ISBN: 9780135231715
Author: Evans
Publisher: PEARSON
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Chapter 1, Problem 5PE

Suppose that a manufacturer can produce a part for $ 10.00 with a fixed cost of $ 5 , 000. Alternately, the manufacturer could contract with a supplier in Asia to purchase the part at a cost of $ 12.00 , which includes transportation.

  1. If the anticipated production volume is 1,200 units , compute the total cost of manufacturing and the total cost of outsourcing.
  2. What is the best decision?

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