The allison-chamber corporation, manufacturer of tractor and other heavy farm equipment, is organized along decentralized product lines, with each manufacturing division operating as a separate profit center. Each division manager has been delegated full authority on all decision involving the sale of that division's output both to outsiders and to other divisions of Allison-Chambers. Division C has in the past always purchased its requirement of a particular tractor-engine component from division A. However, when informed that division A is incresing its selling price to $150, division C's manager decides to purchase the component from external suppliers.
Division C can purchase the component for $135 per unit in the open market.