Merrimac Manufacturing has always purchased a certain componentpart from a suppl

Merrimac Manufacturing has always purchased a certain componentpart from a supplier on the East Coast for $50 per part. Thesupplier is reliable and has maintained the same price structurefor years. Recent improvements in operations and reduced productdemand have cleared up some capacity in Merrimacs own plant forproducing component parts. The particular part in question can beproduced internally by Merrimac at $20 per part with an annualfixed investment of $27000.