2. MS. STANLEY From Caolinns perspective: Needs to researched on
the performance of Caolinns From CJIs perspective: Make these pumps
in-house Mr. Heavy knew two other suppliers 3. ALTERNATIVES FIRST
OPTION To buy from caolinn pumpsAdvantages: They have a strong
relationship They are committed and deliver the order by the time
with quality Disadvantages: Not sure about the ability or
willingness of Caolinn to increase its production of the bilge
pumps The increase in cost ( labor, production cost) would increase
the cost per unit so will CJI accept for it ? 4. SECOND OPTION Make
in-houseIf purchased from Caolinn Cost per unit per month (
$1500*50)=$75000 *12( 1year)= $900000 5 years = $4500000 If made in
house Initial investment ($500,000) Three employees assuming
($2000*3)= $6000 *12 ( 1 year) =$ 72000*5=$360000 =860000 + ram
material, other costs ( thrice the initial investment and employees
salary) $ 2580000 Total = $ 3080000Made-Purchase = $ 3080000 -
$4500000 = ($1420000 ) 5. COMBINATION OF BOTH ALTERNATIVES
Disadvantages Change in quality May they give it at right time or
not As they are present at longer distance transportation cost will
be high and that increase the cost of unit RISK I may loose the
contract after 5 yrs because of wrong decision I may loose a
customer who will generate 30% of my sales later or sooner I may
loose my brand image 6. HOW TO ASSURE THE CONTRACT Since CJI doesnt
have any clue about the future orders from GreatLakes, it cannot
order the bilge pumps about 8 to 10 weeks ahead of production, it
may happen to Caolinn that not able deliver the batch on time. To
meet the raise in demand due to additional contract business in
thefuture from Great Lakes , Caolinn might refuse to bear the
additionalproduction costs. So to assure the continued contract and
additional business from
