The document discusses Jack Smith's decision to either process auto loan applications internally or outsource the process to Loans Etc. Internally, it would cost $2500 in fixed costs plus $25 per application in variable costs. Loans Etc charges $35 per application but requires a $1000 fixed cost for equipment. At 125 applications annually, it is cheaper for Jack to outsource. The break-even point where costs are equal is 150 applications.
The document discusses Jack Smith's decision to either process auto loan applications internally or outsource the process to Loans Etc. Internally, it would cost $2500 in fixed costs plus $25 per application in variable costs. Loans Etc charges $35 per application but requires a $1000 fixed cost for equipment. At 125 applications annually, it is cheaper for Jack to outsource. The break-even point where costs are equal is 150 applications.
The document discusses Jack Smith's decision to either process auto loan applications internally or outsource the process to Loans Etc. Internally, it would cost $2500 in fixed costs plus $25 per application in variable costs. Loans Etc charges $35 per application but requires a $1000 fixed cost for equipment. At 125 applications annually, it is cheaper for Jack to outsource. The break-even point where costs are equal is 150 applications.
The document discusses Jack Smith's decision to either process auto loan applications internally or outsource the process to Loans Etc. Internally, it would cost $2500 in fixed costs plus $25 per application in variable costs. Loans Etc charges $35 per application but requires a $1000 fixed cost for equipment. At 125 applications annually, it is cheaper for Jack to outsource. The break-even point where costs are equal is 150 applications.
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NAME: ERLENE P.
LINSANGAN
YEAR & SECTION: BSBA-1B
Computation: Solve the following using Make-Buy Decision Formula. ( 5 points each)
Jack Smith, owner of Jack’s Auto Sales, is deciding whether his company should process its own auto loan applications or outsource the process to Loans Etc. If Jack processes the auto loan applications internally, he faces an annual fixed cost of $2500 for membership fees, allowing him access to the Top Notch credit company, and a variable cost of $25 each time he processes a loan application. Loans Etc. will process the loans for $35 per application, but Jack must lease equipment from Loans Etc. at a fixed annual cost of $1000.Jack estimates processing 125 loan applications per year. What do you think Jack should do?
Should Jack process the loans internally or outsource the loans if demand is expected to be 125 loan applications?
Answer :
TCbuy= FC + (VCxQ)
= $2500+($25x125)
= $2500+$3125
=$5625
TCmake= FC + (VCxQ)
=$1000+($35x125)
=$1000+$4375
=$5375
Is Jack indifferent to internal processing and outsourcing at one level of loan applications?
Answer :
FCbuy+(VCxQ) = FCmake+(VCxQ)
$2500+($25xQ) = $1000+($35xQ)
$2500+($25x150) = $1000+($35x150)
$6250 = $6250 Gabriela Manufacturing must decide whether to insource or outsource a new toxic-free miracle carpet cleaner that works with its Miracle Carpet Cleaning Machine. If it decides to insource the product, the process would incur $300,000 of annual fixed costs and $1.50 per unit of variable costs. If it is outsourced, a supplier has offered to make it for an annual fixed cost of $120,000 and a variable cost of $2.25 per unit in variable costs.
Given these two alternatives, determine the indifference point (where total costs are equal).
Answer :
FCbuy+(VCbuyxQ)=FCmake+(VCmakexQ)
A. Indifference point : Make=Buy
$300,000+$1.50Q = $120,000+$2.25Q
Q= ($300,000-$120,000)/($2.25-$1.50)
Q= 240,000 Carpet Cleaners
If the expected demand for the new miracle cleaner is 300,000 units, what would you recommend that Gabriela Manufacturing do?
B. Demand(Q) = 300,000 units
Cost to insource : $300,000+$1.50(300,000)=$300,000+$450,000 = $750,000
Cost to outsource : $120,000+$2.25(300,000)=$120,000+$675,000 = $795,000
Discuss the two types of e-commerce.
Business-to-Business(B2B)
B2B transaction is where are business is selling to another business. These transaction often involve customizing an order on a rolling basis. B2B transactions can include bulk pricing, larger quantity order, or specialty products that an average consumer would never on a day to day basis. B2B transactions create powerful and long-lasting relationships between each side when orchestrated correctly. Typically products that are involved in B2B transactions include office supplies, gasoline, and oil, medical equipment, airplanes, ships military equipment. B2B transactions occur in many forms and take place globally. Business-to-Customer(B2C)
The most traditional transaction type from a consumer’s point of view is the B2C model. This model mimics a purchased that made in store at a brick and mortar location but occurs entirely online. Business sell goods straight at customers through their websites. The internet serve as the portal between business and consumer shopping online. Online stores are able to list multiple products and SKUS which gives customer many options to pick and choose from during their buying experience. B2C transaction is not limited to products, but service are quite often distributed in this fashion as well Business may offer services like financial advising, tutoring, subscription membership, and others to grow their presence online.
Discuss the supply chain of cellphone.
A mobile phone has an extremely complex supply chain that is basically made up of three areas: raw material extraction, component manufacture, assembly . At the bottom of the supply chain is the raw materials extraction, such as metals and metal ores. The raw materials are used to make the basic components of a phone. Often the raw materials are from mines with poor environmental records, whose profits are sometimes linked to armed conflicts and that have little or no protection of workers' rights.The next few steps in the supply chain require manufacturers to transform the raw material into abusable material or component.The end product is made up of many different components each with its own supply chain.A basic smartphone is comprised of the following components:
a circuit board containing the brains of the phone;
an antenna;
a liquid crystal display (LCD);
a microphone;
a speaker;
a battery and
a camera.
Once the components have been sourced from manufacturers they are taken to a factory for assembly. In China the largest company to assemble components for electronic companies is Foxconn. The iPhone is famously made at its Zhengzhou facilities in China. According to the New York Times, it takes 94 production lines and about 400 steps to assemble the iPhone.
