There are three alternatives to meet the demand of a product
Alternative I :
Manufacture using a process P
Alternative II:
Manufacture using a process Q
Alternative III:
Buy the product from a vendor
The costs associated with each alternative is given below.
|
cost
|
Alternative I
|
Alternative II
|
Alternative III
|
|
Fixed cost
|
Rs. 1,00,000
|
Rs. 1,90,000
|
|
|
Variable cost (per unit)
|
Rs. 75
|
Rs. 60
|
|
|
Purchase price (per unit)
|
|
|
Rs. 87.50
|
Alternative I is cheaper compared to alternative II when the demand is
(a) 8500 (b) above 8000
(c) 6500 (d) below 6000