BL Inc. Case Study Brian Wilson, materials. manager at B&L Inc. in Lancaster, Permsylvania, was considering a proposal from his purchasing agent to outsource manufacturing for an outrigger bracket It was the end of April and Mr. Wilson had to evaluate the proposal and make a decision regarding whether to proceed. BEIL Inc. Background B&L Inc. manufactured trailers for highway transport trucks. The company comprised three divisions: the Trailer, Sandblast Br Faint, and Metal Fabricating Divisions. Each division operated as a separate prot center, but manufacturing operations between each were highly integrated. The Metal Fabricating Division produced most of the component parts of the trailers, the Trailer Division performed the assembly operations, and the Sandblast 8: Paint Division was responsible for completing the sandblasting and nal painting operation. BELL manufactured approximately 4t] trailers per year, with about two-thirds produced dining the period from November to April. The Outrigger Bracket The outrigger bracket, part number T-l'i, was an accessory that could be used to secure oversized containers. The bracket consisted of four component parts welded together, and each trailer sold by HEEL had 21] brackets1i] per side. The Metal Fabricating Division was currently manufacturing the outrigger bracket. The subassembly partsTEi'I, T-TE, T-ES, and TT'Fwere processed on a burn table, which cut the raw material to size. Although the burn table could work with eight stations, this machine had only been operating with one station. The nal assembly operation, T-Tr't}, was performed at a manual welding station. Manufacturing lead time for the outrigger bracket was two weeks. However, the Metal Fabricating Division had been able to coordinate supply and production with assembly operations. Consequently, nished inventory levels of the outrigger bracket were kept to a minimum. BSLL's inventory holding costs were 2D percent per annum. The Outsour'ng Decision In an effort to reduce costs. the purchasing agent, Alison Heals, who reported to Brian W'dson, solicited quotes from three local companies to supply the outrigger bracket Mayes Steel Fabricators [Mayes), a current supplier to 13er for other components, oered the lowest bid, with a cost of $106.10, FOB B&L. Brian met with the controller, Mike Carr, who provided a breakdown of the manufacturing costs for the outrigger bracket. Looking at the spreadsheet, Mike commented: \"These are based on estimates of our costs from this year's budget. Looking at the material, labor, and overhead costs, I would estimate that the xed costs for this part are in the area of about 20 percent Keep in mind that it costs us about $?5 to place an order with our vendors.\" Exhibit 1 provides Riki's internal cost breakdown and details from the quote from Mayes