Chapter 7: Supply Management
Introduction to Operations & Supply Chain Management (Bozarth & Handfield, 3rd Ed.)
DIRECTIONS 1. Put your name and the four-digit number provided by your instructor in the
space below,and hit enter. This will customize the assignment for you.
2. Print out the entire workbook and put your answers in the space provided.
Zeccardi Sporting Goods produces gear used by baseball and softball players.
The company is thinking about outsourcing the production of a particular product
Current manufacturing operations Costa Rican manufacturer
Fixed Costs: $150,000 per year Cost per product: $30
Variable Costs: Other costs:
Labor $23 per unit Admin costs = $20,000 per year
Material $11 per unit Inspect costs = $15,000 per year
Shipping / pack = $1.50 per unit
In addition to cost, Zeccardi management has identified three other dimensions to
consider: conformance quality, on-time delivery, and product range flexibility.
The importance weights for these three dimensions are 0.4, 0.3, and 0.2, respectively.
Finally, purchasing experts at Zeccardi have rated the performance of current
manufacturing and the Cost Rican manufacturer with regard to these three dimensions.
Their ratings (1 = “poor” to 5 = “excellent”) are as follows:
******* Performance Rating *********
Dimension Current mfg. Costa Rican Mfr.
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Ch 10: Sourcing Decisions the Purchasing Process
Jane Student
Problem 1 In the space below, calculate the total costs of a) continuing to
manufacture the product in-house, and b) outsourcing manufacturing
to the Costa Rican manufacturer.
Annual volume = 67,500 at a price of $30.00 per unit
Cost of curr. mfg. ops = (Variable unit labor cost + variable unit material cost) * annual volume + fixed costs
Problem 2 Calculate the overall preference score for each of the two options. Compare
these results with those in Problem 1. How do you account for the discrepency?
How should Zeccardi weigh the various results?
******* Performance Rating *********
Dimension Weight Current mfg. Wt. Score Costa Rica Wt. Score
The option with the highest score here is considered better overall with regard to quality,
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