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Gary's Gizmos has enjoyed rising customer demand (measured in terms of the number of orders) for the past few years and is now considering ways to increase its capacity. There are three choices: it can open a new manufacturing plant (A), outsource some of its production (B), or expand its current factory (C).
The fixed and variable costs for the three alternatives are as follows:
A: fixed cost $305,000 per year; variable cost: $520 per order
B: no fixed costs; variable cost: $2,520 per order
C: fixed cost $59,000 per year; variable cost: $1,050 per order
a. For each option A, B, and C, what is the range (of orders) over which it provides the lowest cost alternative? (Round up or down to the closest integer.)
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