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 $7.20 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 $5.70.
Option 2 would have an annual fixed cost of $191000 and a variable cost of $4.30.
Calculate the maximum quantity that would have the manager select purchasing the motors from the vendor.