A Company Asked One of Their Analysis Team to Analyze

question 5

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.
Use a two-way data table to show how the savings due to outsourcing changes as a function of different production volume and different bids on per-unit cost for outsourcing. Vary the production volume from 0 to 100,000 in increments of 10,000. The six bids are $3.11, $3.49, $4.50, $4.98, $5.12, and $5.45.

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Definitions:

Law of Demand

An economic principle stating that as the price of a good or service increases, consumer demand for the good or service will decrease, and vice versa, holding all else constant.

Prices

The amount of money required to purchase goods or services, typically set by supply and demand dynamics in the market.

Scarce Resources

Refers to the limited availability of resources that are used for the production of goods and services.

Classified Ads

Short advertisements placed in a bulletin, newspaper, or online platform, categorized by the type of product, service, or job offered.