Final answer:
To assess whether Nib 'N' Ink should produce refills in-house or outsource, one should utilize a break-even decision model that compares the total cost of both options, considering fixed and variable expenses.
Step-by-step explanation:
The range of volumes at which it is more economical for Nib 'N' Ink to produce refills in-house rather than to outsource can be determined using a break-even decision model. A break-even analysis involves calculating the point at which the total cost of in-house production equals the cost of outsourcing. To do this, we need to consider all relevant costs, including fixed and variable expenses for in-house production, and the fixed price of outsourcing. Typically, a company should continue to produce in-house as long as the price exceeds the average variable cost and move to outsource when the cost of in-house production surpasses the cost of outsourcing.
Utilizing data and growth projections, a company can establish the volume at which the total cost of producing an additional unit (marginal cost) is less than or equal to the price to sell that unit (marginal revenue). At volumes below this break-even point, it may be more cost-effective to outsource. However, once the break-even volume is crossed, it may be more profitable for Nib 'N' Ink to produce the refills in-house. Determining this specific range would require analyzing the company's cost structures and pricing strategies.