ACS Inc. will be producing and marketing a new line of medical devices products. Most products use a key ingredient (Ingredient X). At this time, ACS doesn’t know if itâ€™s more convenient to make Ingredient X in-house or buying it from a supplier. The available information is the following: producing Ingredient X internally would require an investment (fixed cost) of $1.5 million and a variable cost of $2,000/pound. A supplier next to ACS could provide the product for $2,800/pound. The auditing, compliance, and other process to qualify the supplier has a onetime total-cost of $15,000. From information provided by marketing, manufacturing estimates that they will need between 1,750-1,950 pounds to be able to produce all the demand.a. Using a spreadsheet model, display, analyze, and explain in detail, ACS two options, and which should be chosen?b. Explain if ACS should consider another supplier with a cost structure as follow: variable cost $2,400/pound, onetime certification total-cost of $25,000, and maximum capacity to produce 1,800 pounds.
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