Han manufacturing purchases a key component of one of its products from a local supplier. The current purchase price of

[answerhappygod]

Han manufacturing purchases a key component of one of its
products from a local supplier. The current purchase price of the
part is 1500 TL/unit. Efforts to standardize the parts worked well
and they can use the same part for five different products.
Management wonders whether it is time to make the part in-house now
rather than buying from the supplier now. Fixed cost that they paid
to the supplier annually was 10000 TL. If they make it in-house
then the fixed cost will be 50000 TL. On the other hand the
variable costs (raw material, overhead, labor ) will be 1300
TL/unit.


Represent the total cost of buying from supplier vs. in-house
making on a two dimensional plot (where vertical axis is for total
cost – horizontal axis is for quantity/volume produced)
Find the break-even quantity that makes these two options (make
in–house or buy from supplier) equal. Based on that provide the
decision if the manufacturing company s production plans foresee
total requirement of 750 units next year for this particular
component.