Buy analysis question, Lawson Industries creates portable

Buy analysis question

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Reference no: EM1378241

Lawson Industries creates portable CD Players. A new model has been constructed that needs a new design of a display unit. LI is contemplating whether to purchase the units from a supplier, to create the units while using a manual assembly system, or to produce the units while using an automated assembly system.

Buy Manual Automated

Annual Volume 100,000 100,000 100,000

Fixed cost per year --- $300,000 $500,000

Variable cost per unit $10 $8 $7

a. What should LI do - buy, produce with manual assembly, or produce with automated assembly?

b. Would your answer change if 150,000 units were needed annually?

c. What other considerations would be important in this decision?

Reference no: EM1378241

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