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.)
Purchasing and Supply Chain Management
6th Edition
ISBN:9781285869681
Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
Publisher:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. Patterson
ChapterC: Cases
Section: Chapter Questions
Problem 5.1SA
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