Discussion Post
I. A bicycle manufacturer currently produces 300,000 units a year and expects output levels to remain steady in the future. It buys chains from an outside supplier for $2 per chain. The plant manager believes their direct in-house productions costs to make their own chains is $1.50 per chain. Machinery to manufacture would cost $250,000 and would be obsolete in 10 years. They would use straight-line depreciation for tax purposes to $0 and then can be sold for scrap for $20,000. Estimation from the plant manager that it would take $50,000 for inventory.
• Using important formulas and theories within the book, should they continue to outsource or should they manufacture their own chains?
• What are the pros and cons of each?
• What would your recommendation be?
II. Celebrities/athletes are often hired to "represent" the image of a corporation. On February 9, 2006, XM Satellite announced a three-year, $55 million deal with Oprah Winfrey. The announcement stated that "Oprah and Friends," a new channel on XM, would begin broadcasting in September 2006. Tiger Woods has had several endorsement deals.
Address the following:
• Give at least 2 other examples?
• Is it good for business?
• Why or why not?
The response should include a reference list. One-inch margins, Using Times New Roman 12 pnt font, double-space and APA style of writing and citations.