Data Manufactured in-house Fixed cost $50,000 Unit variable cost $125 Payoff Table Demand Purchased from supplier...

Data

Manufactured in-house
Fixed cost	$50,000
Unit variable cost	$125	Payoff Table
			Demand
Purchased from supplier			800	1,000	1,200	1,400
Unit cost	$175	Manufacture	$150,000	$175,000	$200,000	$225,000
		Outsource	$140,000	$175,000	$210,000	$245,000
Production volume	1500

Model		ANSWER	Manufacture/Outsource	Value
		Average Payoff
Total manufacturing cost	$237,500	Aggressive
Total purchased cost	$262,500	Conservative

Cost difference (Manufacture - Purchase)	-$25,000
Best Decision	Manufacture

Problem 16A Payoff Tables

Based on the cost model and payoff table provided, determine the average payoff strategy, aggressive, and conservative recommendation. Remember that this payoff table is based on cost so you will want to recommend decisions under each strategy which minimize cost.

Enter your answer in the table by stating whether manufacturing or outsources would be the best choice for each strategy and the value associated with that option.

Expert Solution

ekkarill92 answered 1 year ago

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