Spacely Sprockets, Inc

question 20

Multiple Choice

Spacely Sprockets, Inc., usually pays $1, 000 for a million flanges, which it uses as inputs in the manufacture of sprockets.It also spends an average of $20 per million flanges on finding manufacturers and negotiating contracts.Spacely is capable of making its own flanges at a cost of $980 per million.Given these costs,

• A)Spacely should continue to contract out for flanges
• B)Spacely should start to manufacture its own flanges
• C)it's not possible to say what Spacely should do
• D)Spacely should stop paying the additional $20 to find and negotiate contracts and just buy the flanges outright for $1, 000 per million
• E)Spacely should move away from the use of flanges and toward an input that it can produce by itself

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Definitions:

Larger Issues

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Transitions

The process or period of changing from one state or condition to another.

Phrases

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Shifting Points

Changing or adjusting one's focus, perspective, or position regarding a topic or issue.