Company has determined that they can increase their profitability by $80,000 per year if they outsource the production of some parts used to build their most popular product. A significant amount of the cost savings will come from reduced labor force. This includes some long-term employees that served as quality-control inspectors. The parts being outsourced are difficult to manufacture and critical to the performance of the machine where they get installed. The inspectors were highly paid and very proficient at their job. The analysis assumes that space cleared as a result of this outsourcing will be rented to another company for storage. The vendor that would provide the parts has an excellent reputation for precision parts and has experienced dramatic growth in the last few years. They have not produced these particular parts before, but have committed to the price for at least 2 years. Assume the computational analysis was done correctly. List 2 non-quantitative considerations worth discussion before they commit to this outsourcing arrangement. Please list how you do the calculation.

Answer rating: 100% (QA)

A Risk of Failure to produce required quality by outsourcing arrangmenet vendor The new vendor thoug... View the full answer