Data
Manufactured in-house
Fixed cost	$50,000
Unit variable cost	$125		Payoff Table
				Demand
Purchased from supplier				800	1,000	1,200	1,400
Unit cost	$175		Manufacture	$150,000	$175,000	$200,000	$225,000
			Outsource	$140,000	$175,000	$210,000	$245,000
Production volume	1500
Model			ANSWER	Manufacture/Outsource	Value
			Average Payoff
Total manufacturing cost	$237,500		Aggressive
Total purchased cost	$262,500		Conservative
Cost difference (Manufacture - Purchase)	-$25,000
Best Decision	Manufacture

Problem 16A Payoff Tables

Based on the cost model and payoff table provided, determine the average payoff strategy, aggressive, and conservative recommendation. Remember that this payoff table is based on cost so you will want to recommend decisions under each strategy which minimize cost.

Enter your answer in the table by stating whether manufacturing or outsources would be the best choice for each strategy and the value associated with that option.