1. Perform a quantitative insourcing/outsourcing analysis using the data provided. What qualitative issues might affect your final decision? Identify any costs or issues that are not part of your analysis that might affect your decision. What is your recommendation regarding what FlexCon should do with its family of pistons? Support your arguments with evidence gathered during your analysis.
Using the data presented in the case, below is a quantitative analysis:
Costs or issues that may cause concern that were not mentioned in the analysis above are travel expenses in terms of the outsourcing analysis and management or contracting fees again with outsourcing. Also, if FlexCon were to offer free returns on products,…show more content… Again, using the information in the case and the thorough calculations, FlexCon should continue to keep the manufacturing of pistons insourced at their own locations. While they would save 18,000 dollars in the first year using the outsourced option, the company would lose 127,650 dollars in the second year without even accounting for taxes on the pistons. In addition, the company considers the pistons to be high quality and the company may lose this attribute by giving this duty to a different company.
2. Assume your group decided to outsource the pistons to the external supplier. Identify a plan that would enable FlexCon to carry out this recommendation. Be as thorough as possible.
If the group determines it would be most ideal to outsource to an external supplier, FlexCon would have to make an action plan to ensure success. The first step in the plan would be to determine a list of potential suppliers. The company would want to look at developing a long term relationship with this supplier since the use of pistons will be go well into future years. After selecting the
