USE ONLY EXCEL!!USE ONLY EXCEL!!USE ONLY EXCEL!!USE ONLY EXCEL!!USE ONLY EXCEL!!USE ONLY EXCEL!! A company asked...
USE ONLY EXCEL!!USE ONLY EXCEL!!USE ONLY EXCEL!!USE ONLY EXCEL!!USE ONLY EXCEL!!USE ONLY EXCEL!!
A company asked one of their analysis team to analyze and create models that help decide whether they should manufacture a particular product or outsource its production. The different components are given below: Fixed Cost, FC = $25,000 Material Cost per Unit, MC = $2.15 Labor Cost per Unit, LC = $2.00 Outsourcing Cost per Unit, O = $4.50 Note that per-unit material and labor cost together make up the variable cost per unit.
Use a two-way data table to show how the savings due to outsourcing changes as a function of different production volume and different bids on per-unit cost for outsourcing.
Vary the production volume from 0 to 100,000 in increments of 10,000. The six bids are $3.11, $3.49, $4.50, $4.98, $5.12, and $5.45.
Homework Answers
Answer: the two way table is made as below
| FC | MC | LC | O | Total Inhouse Cost | Tota Out Source cost | Saving |
| 25000 | 2.15 | 2 | 4.5 | 66500 | 45000 | 21500 |
So we have used thsi calculation in calculating teh saving = Outsourced - In house manufacturing cost
Refer the two way tabel as below
| Volume | Saving by outsourcing at below bids as | ||||||
| 4.5 | 3.11 | 4.39 | 4.5 | 4.98 | 5.12 | 5.45 | |
| 10000 | -21500 | -35400 | -22600 | -21500 | -16700 | -15300 | -12000 |
| 20000 | -18000 | -45800 | -20200 | -18000 | -8400 | -5600 | 1000 |
| 30000 | -14500 | -56200 | -17800 | -14500 | -100 | 4100 | 14000 |
| 40000 | -11000 | -66600 | -15400 | -11000 | 8200 | 13800 | 27000 |
| 50000 | -7500 | -77000 | -13000 | -7500 | 16500 | 23500 | 40000 |
| 60000 | -4000 | -87400 | -10600 | -4000 | 24800 | 33200 | 53000 |
| 70000 | -500 | -97800 | -8200 | -500 | 33100 | 42900 | 66000 |
| 80000 | 3000 | -108200 | -5800 | 3000 | 41400 | 52600 | 79000 |
| 90000 | 6500 | -118600 | -3400 | 6500 | 49700 | 62300 | 92000 |
| 100000 | 10000 | -129000 | -1000 | 10000 | 58000 | 72000 | 105000 |
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