Given the Following Data for a Make-Or-Buy Decision What Would Be Your Total Costs for the Preferred Alternative

question 48

Short Answer

Given the following data for a make-or-buy decision: $$\begin{array} { l l l } \text { Alternative } & \text { Fixed Cost } & \text { Variable Cost } \\\hline \text { Buy } & \$ 0 \text { per year } & \$ 8 \text { per unit } \\\text { Make } & \$ 100,000 \text { per year } & \$ 4 \text { per unit }\end{array}$$ What would be your total costs for the preferred alternative, for 32,000 units per year?

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Definitions:

Stanley Milgram

An American social psychologist best known for his controversial experiments on obedience to authority conducted in the 1960s.

Obedience

The act of following orders or instructions, usually from an authority figure, without questioning.

Foot-In-The-Door Technique

A strategy designed to gain a favorable response to a small request at first, with the intent of making the person more likely to agree later to a larger request.

Compliance Strategy

Techniques designed to persuade or influence others to agree with one's requests, rules, or desires.