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A manager is trying to decide whether to purchase (buy) a certain part or to have it produced internally (m Internal production could use either of two processes. One would entail a variable cost of USD19.00 per u an annual fixed cost of USD 220,000.00; the other would entail a variable cost of USD15 per pnit and an a fixed cost of USD 245,000.00 There are three vendors who are willing to provide the part. Vendor 1 has a USD 21.00 per unit for any volume up to 32,000 units. Vendor 2 has a price of USD 24.00 per unit for a der of 1,000 units or less and USD18.00 per unit for larger quantities. Vendor 3 offers a price of USD 23.00 per for the first 1,000 units, and USD 19 per unit for additional units. If the manager anticipates an annual volume of 10,000 units, which alternative would be best from a cost standpoint? For 25,000 units, which alternative would be best? 1. At 10,000 units, is the total cost from vendor 1. 2 At 10000 units is the total.cost from vendor 2

A manager is trying to decide whether to purchase (buy) a certain part or to have it produced internally (m Internal production could use either of two processes. One would entail a variable cost of USD19.00 per u an annual fixed cost of USD 220,000.00; the other would entail a variable cost of USD15 per pnit and an a fixed cost of USD 245,000.00 There are three vendors who are willing to provide the part. Vendor 1 has a USD 21.00 per unit for any volume up to 32,000 units. Vendor 2 has a price of USD 24.00 per unit for a der of 1,000 units or less and USD18.00 per unit for larger quantities. Vendor 3 offers a price of USD 23.00 per for the first 1,000 units, and USD 19 per unit for additional units. If the manager anticipates an annual volume of 10,000 units, which alternative would be best from a cost standpoint? For 25,000 units, which alternative would be best? 1. At 10,000 units, is the total cost from vendor 1. 2 At 10000 units is the total.cost from vendor 2

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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A manager is trying to decide whether to purchase (buy) a certain part or to have it produced internally (make). Internal production could use either of two processes. One would entail a variable cost of USD19.00 per unit and an annual fixed cost of USD 220,000.00, the other would entail a variable cost of USD15 per pnit and an annual fixed cost of USD 245,000.00. There are three vendors who are willing to provide the part. Vendor 1 has a price of USD 21.00 per unit for any volume up to 32,000 units. Vendor 2 hasa price of USD 24.00 per unit for a demand of 1,000 units or less and USD18.00 per unit for larger quantities. Vendor 3 offersa price of USD 23.00 per unit for the first 1,000 units, and USD 19 per unit for additional units. If the manager anticipates an annual volume of 10,000 units,, which alternative would be best from a cost standpoint? For 25,000 units, which alternative would be best? 1. At 10,000 units, is the total cost from vendor 1. 2. At 10,000 units, is the total cost from vendor 2. 3. At 10,000 units, is the total cost from vendor 3. 4. At 25,000 units, is the total cost from vendor 1. 5. At 25,000 units, is the total cost from vendor 2. 6. At 25,000 units, is the total cost from vendor 3 7. If the item is made internally, is the cost for 10,000 units using Option 1. 8. If the item is made internally, is the cost for 10,000 units using Option 2. 9. If the item is made internally, is the cost for 25,000 units using Option 1. 10. If the item is made internally, is the cost for 25,000 units using Option 2.
Transcribed Image Text:A manager is trying to decide whether to purchase (buy) a certain part or to have it produced internally (make). Internal production could use either of two processes. One would entail a variable cost of USD19.00 per unit and an annual fixed cost of USD 220,000.00, the other would entail a variable cost of USD15 per pnit and an annual fixed cost of USD 245,000.00. There are three vendors who are willing to provide the part. Vendor 1 has a price of USD 21.00 per unit for any volume up to 32,000 units. Vendor 2 hasa price of USD 24.00 per unit for a demand of 1,000 units or less and USD18.00 per unit for larger quantities. Vendor 3 offersa price of USD 23.00 per unit for the first 1,000 units, and USD 19 per unit for additional units. If the manager anticipates an annual volume of 10,000 units,, which alternative would be best from a cost standpoint? For 25,000 units, which alternative would be best? 1. At 10,000 units, is the total cost from vendor 1. 2. At 10,000 units, is the total cost from vendor 2. 3. At 10,000 units, is the total cost from vendor 3. 4. At 25,000 units, is the total cost from vendor 1. 5. At 25,000 units, is the total cost from vendor 2. 6. At 25,000 units, is the total cost from vendor 3 7. If the item is made internally, is the cost for 10,000 units using Option 1. 8. If the item is made internally, is the cost for 10,000 units using Option 2. 9. If the item is made internally, is the cost for 25,000 units using Option 1. 10. If the item is made internally, is the cost for 25,000 units using Option 2.
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