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

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter4: Linear Programming Models

Section4.8: Data Envelopment Analysis (dea)

Problem 42P

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A manager is trying to decide whether to purchase a certain part or to have it produced internally Internal production could use either of two processes. One would entail a variable cost of $17 per unit and an annual fixed cost of $200,000, the other would entail a variable cost of $14 per unit and an annual fixed cost of $240,000. Three vendors are willing to provide the part. Vendor A has a price of $20 per unit for any volume up to 30,000 units. Vendor B has a price of $22 per unit for demand of 1,000 units or less, and $18 per unit for larger quantities. Vendor Coffers a price of $21 per unit for the first 1,000 units, and $19 per unit for additional units a. If the manager anticipates an annual volume of 10,000 units, which alternative would be best from a cost standpoint?" For 20,000 units, which alternative would be best" b. Determine the range for which each alternative is best. Are there any alternatives that are never best? Which?
A manager is trying to decide whether to purchase a certain part or to have it produced internally.Internal production could use either of two processes. One would entail a variable cost of $17 perunit and an annual fixed cost of $200,000; the other would entail a variable cost of $14 per unitand an annual fixed cost of $240,000. Three vendors are willing to provide the part. Vendor A hasa price of $20 per unit for any volume up to 30,000 units. Vendor B has a price of $22 per unit for demand of 1,000 units or less, and $18 per unit for larger quantities. Vendor C offers a price of$21 per unit for the first 1,000 units, and $19 per unit for additional units.a. If the manager anticipates an annual volume of 10,000 units, which alternative would be bestfrom a cost standpoint? For 20,000 units, which alternative would be best?
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