HW_3 - Management is considering vertical integration. It...

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1. Ch4 –(problem #6) (6 points) 2. Annual fixed costs are $900,000 and $800,000 for outsourcing and insourcing, respectively, and variable costs are $28 and $32 for outsourcing and insourcing, respectively. If current annual demand is 22,000 units, by how much must demand increase in order for outsourcing to become cheaper? (2 points) 3. Boys `R Us sells suits to young men.
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Unformatted text preview: Management is considering vertical integration. It is determined that the company can produce its own suits for a fixed annual cost of $2,000,000 and a production cost of $100 per suit. The current supplier charges a $2,500,000 fixed annual cost and $120 per suit. Over what ranges of demand is each option best? (2 points)...
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