Engineering Economy Class 4. Samsung Electronics is trying to reduce supply chai

Question

Engineering Economy Class

4. Samsung Electronics is trying to reduce supply chain risk by making more responsible m buy decisions through improved cost estimation. A high-use component (expected usage is 5000 units per year) can be purchased for $25 per unit with delivery promised within a wee Alternatively, Samsung can make the component in-house and have it readily available at a cost of $5 per unit, if equipment costing $150,000 is purchased. Labor, and other operating costs are estimated to be$35,000 per year over the study period of 5 years. Salvage is estimated at 10% of first cost and 12% per year. Neglect the element of availability. (20 points) ake k. (a) Determine the breakeven quantity

Explanation / Answer

-25Q = -150,000 (A/P, 12%, 5) + 15,000 (A/F, 12%, 5) - 35,000 - 5Q

-25Q +5Q = -150,000 (0.27741) + 15,000 (0.15741) - 35,000

Q = -74,250 / -20

Q = 3,713 units a year

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