A Company Asked One of Their Analysis Team to Analyze

question 31

Essay

A company asked one of their analysis team to analyze and create models that help decide whether they should manufacture a particular product or outsource its production. The different components are given below:
Fixed Cost, FC = $25,000
Material Cost per Unit, MC = $2.15
Labor Cost per Unit, LC = $2.00
Outsourcing Cost per Unit, O = $4.50
Note that per-unit material and labor cost together make up the variable cost per unit. a. Build an influence diagram that illustrates how to calculate the difference in cost of manufacturing and outsourcing.
b. Using mathematical notation, give a mathematical model for calculating the difference in cost of manufacturing and outsourcing.
c. Implement your model from part (b) in Excel using the principles of good spreadsheet design.
d. If the company wants to make 30,000 units of a particular product, what are the savings due to outsourcing?

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Definitions:

Arrhythmia

An irregular heartbeat pattern, which can be too slow, too fast, or erratic, affecting how effectively the heart pumps blood.

Idiopathic Hypertension

High blood pressure of unknown cause.

Tachycardia

A condition characterized by an abnormally fast heart rate, typically defined as a resting heart rate over 100 beats per minute.

Arrhythmia

An irregular heartbeat, which can be too fast, too slow, or with an irregular rhythm.