Problem 4. 3PL Relationships and Pricing Methodology (6 points)

You work for Randy's Radon Readers (RRR's), which is considering outsourcing its logistics for managing returns of high-end radon monitoring detectors, refurbishing returned items, and providing replacements (generally furbished) to customers whose products are under warranty. This process includes arranging for pickup and delivery. The refurbishment process requires that the reburbisher invest in 1) some equipment for recalibrating the detectors and 2) training of staff to use the detectors. Because the business is relatively small and not necessarily steady, it is likely that the third party that takes this on will be involved in some other type of reverse logistics and refurbishment.

Please describe what type of relationship you think RRR's should have with its potential outsourced supplier. Explain why. (3 points)

(Minimum: 100 words)

Would this be an appropriate opportunity to use a gainsharing approach and a performance-based contract? Explain why. (3 points)

(Minimum: 100 words)