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Unformatted text preview: Quiz 1, DSC 335 Name _____________________ A manufacturer is planning for introducing a new laptop computer. The manufacturer has two
options: (1) MAKE: Upgrade an existing capacity and produce in-house; it costs $120,000 to
upgrade the capacity, and $400 to produce one unit. (2) BUY: Outsource production to a supplier;
it costs $60,000 to set up the production line of the supplier, and costs $500 to purchase one unit
from the supplier (including shipping).
What is the minimum market demand, Q, at which the MAKE option has a lower cost than the
Solution To find the break-even quantity Q, we set the total costs of the two options equal:
. We have ...
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This note was uploaded on 04/05/2012 for the course DSC 335 taught by Professor Tolgaaydinliyim during the Fall '10 term at University of Oregon.
- Fall '10