Susan Gilbert a purchasing agent for Wisconsin Plastic Inc (WSI) is reviewi

Susan Gilbert a purchasing agent for Wisconsin Plastic Inc (WSI) is

reviewing quotations from suppliers for a new plastic gear. Susan plans to either

place an order for 12000 gears from a supplier with the least cost quotation or

recommend that WSI purchase the necessary equipment and make the gear itself.

Relevant data for this make-or-buy decision are found below:

Make Buy

Fixed Cost of Equipment $60000 0

Variable cost per part $16 $20

What should Susan recommend? Make or Buy? Why? Choose one. (5 points)

What should Susan recommend if the order size is increased by 25%? Make or

Buy? Why?