CHAPTER FIVE: Estimating Project Times and Costs (course name: project management)
Question:
ABC Inc. will hire 200 new computer programmers this year. Managers are considering whether to make or buy office furniture for the new hires. They can purchase desks for $2,000 per programmer or they can make the desks itself. Equipment to assemble the desks can be scrounged from the company’s carpentry shop. That old equipment has already been fully depreciated. Materials cost $200 per desk and labor (and benefits) cost $30 per hour. ABC hired a local shop to build a prototype desk. That desk required 50 hours of labor. If the learning curve is 90 percent, should ABC make or buy the desks?