A firm plans to begin production of a new small appliance. The manager has three options:
Option 1: purchase the motors for the appliance from a vendor at $5 each;
Option 2: produce them in house using technology A with an annual fixed cost of $80000 and a variable cost of $4 per unit; or
Option 3: produce them in house using technology B with an annual fixed cost of $190000 and a variable cost of $2 per unit.
The range of output for which Option 1 is best is
0-63333
units.
The range of output for which Option 2 is best is
-63334
units.
The range of output for which Option 3 is best is
units.
FORMAT TO ENTER VALUES:
– Round to the nearest integer, no decimals
– Enter the range as ####-####, for example: 47500-92000.
– If an option is outperformed by other option(s), enter NEVER (all capital)
– For an open ended range use INFINITY (all capital), for example: 47500-INFINITY
– If an option is good only at one point, just enter the value of the output, for example 8750
– DO NOT USE parentheses, spaces or commas!