A make-buy decision must be made for a component in a new product. Expected usage is 6,000 units per year, for a study period of 8 years. The component can be purchased from a supplier for $C=22 per unit, with delivery promised within a week.
Alternatively, the component can be made in-house and be readily available, at a cost of $U=5 per unit, if equipment costing $P= 148.409 is purchased.
Labor and other operating costs are estimated to be $O=34, 071 per year Salvage is estimated at 15% of the first cost.
The MARR is 8% per year. Neglect the element of availability. What is the break-even quantity for deciding whether to make or buy this component?