An item has a yearly demand of 4,000 units. The different costs in respect of make and buy are as follows. Determine the best option.
Buy
Make
Item Cost/Unit
$16.00
$10.00
Procurement Cost /Order
$240.00
Set-up cost
$120.00
Annual carrying cost/Item/Year
$3.20
$2.00
Production rate/year
16,000 units
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procurement cost order
item
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