Question 35. (a) Discuss the difference between outsourcing, purchasing, subcontracting and buying-in and related issues for a manufacturing company? (b) Sports Co. Ltd, makes a variety of sporting goods products. Recently questions have been raised concerning the costs to make some of these products when compared with the opportunities to buy these products in from companies abroad. These alternative products are of equal quality and performance when in use and conform to various standards required for the various sporting bodies. A number of products have been assessed and the following data has been produced in Table 1: Table 1. Data Collected Description Forecast Volume (Units) Cost to make () per unit Cost to Purchase () per unit Fixed Costs () per annum Golf clubs set 8,000 300 349 250,000 Cricket bats 5,000 23 44 135,000 Tennis racquets 9,000 70 75 80,000 Golf shoes 11,000 35 59 250,000 Sports Co. Ltd., also want to start making Badminton racquets in a dedicated production facility with an estimated actual production capacity of 20,000 units per annum. The costs of making the Badminton racquets are shown in Table 2, below. The production facility will cost 120,000 per annum in fixed costs. The purchase price of ready assembled Badminton racquets from a trusted supplier is 42.00. Comment on the possibilities of buying-in the Badminton racquets. Table 2. Data for the Manufacture of Badminton Racquets Description Variable costs per unit() Metal frame 15 Leather for handle 3.5 Nylon cord for head 5.5 Tensioning cord 1 Plastic insert for 0.5 handle Glue 0.5 Direct labour 6 Testing Labour 3 Note: A simple spreadsheet model can be used to speed up the calculations. Question: Your job is to make recommendations on which products should be bought-in and which products should be made by Sports Co. Ltd