A firm is considering whether to continue to buy a particular component or to make the component themselves. There is no fixed cost associated with buying the component, but each component costs $17 to purchase. If the firm makes the component, it will incur a fixed cost of $5,000, but will be able to produce each component for $10. Which decision below is correct?
a. Make if estimated demand is less than 714.3 units
b. Buy if estimated demand is greater than 5,000 units
c. Make if estimated demand is greater than 714.3 units
d. Buy if estimated demand is greater than 714.3 units
c. Make if estimated demand is greater than 714.3 units
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When defining the problem the manager and the researcher make assertions that certain conditions exist or that certain reactions will take place if the considered solutions are implemented. These assertions are known as:
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