Refer to Flyaway Company, which produces window fans.
Analyzing Make-or-Buy Decision
Flyaway Company also has the Cyclone fan model. It is the company’s top-selling model with sales of 30,000 units per year. This model has a dual fan as well as a thermostat component that causes the fan to cycle on and off depending on the room temperature. Flyaway has always manufactured the thermostat component but is considering buying the part from a supplier.
It costs Flyaway $5 to make each thermostat ($3 variable and $2 fixed). Mostat Co. has offered to sell the component to Flyaway for $4. Flyaway’s decision to purchase the part from Mostat would eliminate all variable costs but none of the fixed costs. Flyaway has no other possible uses for the area currently dedicated to the thermostat production.
Determine whether Flyaway should continue to make the thermostat or purchase the part from Mostat Co. Justify your answer.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.