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

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1 Han Manufacturing Purchases A Key Component Of One Of Its Products From A Local Supplier The Current Purchase Price 1 (33.51 KiB) Viewed 43 times

1. 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. a) 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) b) 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