Stryker Corporation: in-Sourcing Pcbs

796 Words Jun 2nd, 2013 4 Pages
Stryker Corporation: In-sourcing PCB’s
Conclusion:
If Stryker consider option 1 and keep safety stock of the electronic board then it will not resolve the problem of quality of input material. It will also increase the cost of inventory which will affect the profitability. But this could resolve the problem of reliable delivery of goods. That is if the supplier is unable to deliver the material in timely manner then they would have enough inventory that they can continue production without any hurdles.
If it considers option 2 that is to create partnership with their suppliers then they will be able to receive continuous delivery of goods as well as the supplier will ensure high quality of goods to be delivered. But relying on only one
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Net Present Value (NPV) Cost of new project $m
Site preparation cost 3.03
Architecture and engineering fees 0.278
Furnishing cost 0.126
Communication and IT cost 0.21 capital equipment cost 2.6432587
Total investment 6.2872587 calculation of depreciation assume full year depreciation will be charged Building depreciation
Building cost = 3.308 depreciation per annum 0.110266667 IT and furnishing depreciation cost = 0.336 depreciation per annum 0.112 Capital equipment depreciation cost = 2.6432587 depreciation per annum 0.377608386 Total depreciation per annum 0.599875052 approx = 0.6 calculation of saving from manufacturing inhouse year 0 1 2 3 4 5 material payment 60% -0.851 -1.133 -1.365 -1.57 material payment 40% -0.57 -0.76 -0.91 -1.05 -1.28 total material payment -0.57 -1.61 -2.04 -2.41 -2.85
50% of variable cost are wages -0.230 assume in 2004 the no. of employees are same as in 2002 so, wages per employee = -0.0000163 in 2006 56 more employees were hired (ADDITIONAL LABOUR COST) -0.000915457 labour cost -0.230 -0.8345 -0.835415457 -0.668915457 -0.711415457 -0.763915457 other variable cost -0.2295 -0.8345 -0.8345 -0.668 -0.7105 -0.763
Total variable

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