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Supplier quote comparison
Compare two supplier offers on the same purchase quantity and cost basis.
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Make or Buy Cost & Break-Even Calculator
Compare in-house and purchased supply costs for one planning period, including a feasible continuous cost crossover when one exists.
Make or buy calculator
Compare in-house and purchased supply costs for one planning period, including a feasible continuous cost crossover when one exists.
YOUR RESULT LIVE CALCULATION
Lower entered cost: make
$120,000/ planning period
RELEVANT COSTS, SAME VOLUME- Make total
- $120,000
- Buy total
- $125,000
- Cost difference between alternatives
- $5,000
- Continuous nonnegative crossover
- 8,750 units
A continuous cost crossover is not a capacity check or a sourcing recommendation. Exclude sunk and unavoidable costs.
BEHIND THE NUMBER
How the calculation works
Use only costs that differ between the alternatives over the same horizon and scope. A continuous crossover is reported only if unit-cost slopes differ and the calculated volume is nonnegative. Equal slopes have no unique crossover; identical cost lines tie at every volume. A fractional crossover is not a whole-unit order instruction.
Make total = make fixed + Q x make unit cost; buy total = buy fixed + Q x buy unit cost; crossover Q = (make fixed - buy fixed) / (buy unit - make unit)
When this calculation helps
Compare the entered fixed and variable cost structures over a relevant volume range. A crossover identifies where the arithmetic preference changes under those assumptions.
Check the interpretation
Check available capacity, quality, intellectual property, continuity, and switching effort separately. An irrelevant or negative crossover is not a feasible production plan. Fixed costs that remain after outsourcing should not be presented as avoidable savings.
Exclude sunk or unavoidable allocated costs. Confirm capacity, quality, lead time, intellectual property, supply continuity, logistics, and relevant opportunity costs separately. A lower entered cost is not a sourcing recommendation.
Good to know
Why can break-even be N/A?
Parallel cost lines have no unique crossover. A negative crossover lies outside the nonnegative-volume model. Dollar comparisons at your entered volume still work in both cases.
Does this use all factory overhead?
No. Include avoidable or otherwise relevant costs that change between alternatives. Unchanged allocations and sunk costs can distort the decision.