One of your Taiwanese suppliers has bid on a new line of molded plastic parts that is currently being assembled at your plant. The supplier has bid $0.10 per part, given a forecast you provided of 100,000 parts in year 1; 400,000 in year 2; and 700,000 in year 3. Shipping and handling of parts from the supplier’s factory is estimated at $0.03 per unit. Additional inventory handling charges should amount to $0.003 per unit. Finally, administrative costs are estimated at $10 per month.
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