Saber has a total of 12 full-time resources doing various roles. In addition, there are about 20 Subject Matter Experts (SMEs) who also have to be transitioned. This deliverable is included in the 4.0 Artifacts work stream. The 12 full-time resources have been classified as follows:
Role

Role	Number	Monthly salary	Comment
Senior Management	2	$10000	These are the face of the organization and need to be kept as employees.
Sales	2	$6,000	These staff sell ads on the web site. Your company has no experience with this type of sales and thus you want to retain these resources.
support	2	$5000	Let go, assumed by Mammoth IT department
Technology	3	$6500	These are the technical resources that maintain the website and understand the architecture and must be kept as long as you are using the website.
Finance	1	$7000	Let go, assumed by Mammoth finance department
Legal	1	$9000	Let go, assumed by Mammoth legal department
HR	1	$7000	Let go, assumed by Mammoth HR department

The saber full-time resources are all located in one city in Europe, but your head office is in North America. Mammoth has a small office in Europe, but not in the same city as Saber. In talking to your HR, they indicated that there are no vacancies in the departments for the redundant staff at this time, especially since they are based on Europe. In your analysis, you do not have to include any severance to be paid to the staff. The severance will be the same for a make or buy option.

Mammoth uses a 4 criteria weighted model described in the table below:

Criteria	scoring	weight
Cost	1-lowest,0-highest	50%
Lawsuit Risk	1-low, 0.5 Medium, 0-high	20%
HR Projects	1-on Schedule, 0-Delayed	20%
Time	1-Fastest, 0-Lowest	10%
Total		100%

for this decision, you have been asked to use this model

Make Option

The Mammoth HR department feels that if they defer four of their projects freeing up 2 people, and take on the HR person from Saber for 6 months (there would be a 40% increase to their monthly salary to cover Admin and overhead costs), they would have enough capacity to handle the transition of these Saber resources. The HR Department has recently completed another similar transition and have calculated it would take 1,500 hours at $75/hour to complete. Plus, the HR Manager would need some legal advice to support the transition because it is outside of North America. Based on past experience, the HR Manager estimates this would require 100 hours of support at $200/hour. It is expected that with the Mammoth HR Department handling the transition, it will take about 3 months and will result in an additional month of pay before Saber resources are let go over the buy option. For example, if the make option is selected, the finance resource would have to be paid 1 extra month of salary before being let go and given a severance package. however, for the 2 senior management resources. their salary does not have to be included as they are not being let go and thus have to be paid whether the make and buy option is selected.

Buy Option

You have completed a RFI and you discovered that there are a number of companies that do this type of work. In general, these companies can get the work done in a month and it looks like their cost will be about $150,000.it is estimated a month will be required for the procurement, resulting in a total duration of 2 months for the buy option.

The Mammoth HR department, based on their experience with hiring these firms, say that typically they will have to have one of their resources supporting the organization full time for a month and then they need another internal staff member full time for 2 months after they leave to “tidy up the mess” for a total of 450 hours at $75/hour. In addition, their experience has been these Companies mishandled the employees which results with lawyers getting involved. The net result is additional costs and having to pay more for the severance. You figure the additional severance cost could be $100,000 and there is a 20% chance that one of the staff members from Saber would go this route. In addition, there will be an internal cost to do the procurement which you estimate will be 100 hours at $75/hour.

Assignment Requirements
Your submission should consist of:

1. The cost elements (calculations) for the Make Analysis

make option
item	quantity	rate	Cost

2. The cost elements (calculations) for the Buy Analysis

Buy option
Item	quantity	Rate	Cost

.3 Weighted Scoring Analysis
recommendation to either make or buy using the four criteria weighted scoring analysis

Buy option
criteria	scoring	weight	Make	Buy

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Answer rating: 100% (QA)

This is a business decision analysis problem It appears Saber is evaluating whether to transition some aspects of its business internally Make option ... View the full answer