A firm plans to begin production of a new small appliance. The manager must decide whether to purchase the motors for the appliance from a vendor for $6.60 each or to produce them in house. There are two in house options.
Option 1 would have an annual fixed cost of $161000 and a variable cost of $5.60.
Option 2 would have an annual fixed cost of $192000 and a variable cost of $3.70.
Calculate the maximum quantity that would have the manager select purchasing the motors from the vendor.