Case Study #3.docx - 1 Executive Summary The managers at...

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1 Executive Summary The managers at Wagner Fabricating Company have been reviewing the economic feasibility of manufacturing a certain part of the company that is currently purchasing from their supplier. The capital has been established to be 13%, this will be used for the funds of the investment, also over the past year $600,000 was on average the amount of the company’s inventory. There was $24,000 that was spent on insurance related inventory and taxes. There will also be an estimated of a $12,000 lost because of shrinkage. There is a remaining $15,000 that is spend on overhead which includes lighting, heating and utility expenses. There is two hours that is required for
2 coordinating and process an order. Salaries are an average of $28 per hour but this is also including benefits, there is a detailed analysis of 125 orders which has a total of $2,375 which includes the cost of telephone, postage and paper. Approximately the normal distributed with the mean of 64 unites has a standard deviation of 10 times. The company is currently looking to purchase that part of the supplier for $18 per unit, this is also with the company considering an alternative for producing. The production capacity is a rate of 1,000 units per month. Production costs are expected to be more like around $17 per part, in a two-week time the mean of 128 units

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