The buy decision that faces the firm is to have a contractual method of production. This method was proposed by the Engineering Tools to the CEO of Fibertec. This method involved outsourcing the supply and adapting the PTC to meet the needs of their potential customers. The traditional make decision that faced the firm was to continue with their old way of manufacturing which is manufacturing internally.
Fibertec still have an opportunity to use its machine and LT4 which is their strength. Furthermore, if Fibertec opts to sell its machine, it would still gain 100,000. If Fibertec still decides to sell its LT4, it would gain 100 in every ton. Fibertec spends 120,000 every year by renting a separate house outing its main building for IT Department. Fibertec overhead does not give real representation for savings e.g. the amount allocated to it does not include reductions in cost. All these are seen as Fibertec weakness.
Delegate your assignment to our experts and they will do the rest.
Fibertec have an opportunity of closing the IT Department and moving it into the main building thus saving the 120,000 spent every year on rent. It also has an opportunity spending a lesser amount on production. Fibertec is threaten of losing its team that have been loyal to it for over 20 years. It also has threat of negotiating with the unions on severance pay.
The application of the contractual method of production would be cost friendly to the Fibertec as it only involves paying the Engineering Tools.it would also lead to moving of the IT Department into the main building thus saving the amount spent on rent yearly. Whereas, the application of traditional method of production will lead to retention of Fibertec employees who have been very loyal though, it would lead to over expending on production. Application of the contractual method of production would lead to many employees being redundant but the customers would be satisfied since the PTC will be adapted to meet their needs.
According to the above-mentioned things, I would recommend on the application of the contractual method of production as it is economic friendly and results into customers’ satisfaction
