Question

Samsung  Electronics is  trying  to reduce  supply chain risk by making more responsible make-buy decisions through  improved  cost estimation.  A High-use component can be purchased for $25 per unit with delivery promised within a week. Alternatively, Samsung can make the component in-house and have it readily available at a cost of $5 per unit, if equipment costing $150,000 is purchased. Labor and other operating costs are estimated to be $35,000 per year over the study period of 5 years. Salvage  is estimated  at  10% of  first  cost and i = 12%  per  year. Determine the breakeven quantity

Answer 1

Samsung  Electronics is  trying  to reduce  supply chain risk by making more responsible make-buy decisions through  improved  cost estimation.  A High-use component can be purchased for $25 per unit with delivery promised within a week. Alternatively, Samsung can make the component in-house and have it readily available at a cost of $5 per unit, if equipment costing $150,000 is purchased. Labor and other operating costs are estimated to be $35,000 per year over the study period of 5 years. Salvage  is estimated  at  10% of  first  cost and i=12%  per  year. Determine the breakeven quantity