Outsourcing

Cymraeg

Outsourcing

A-Level Outreach Program

Welcome to an installment of Aberystwyth Business School's Video Lecture Series.

These lectures are in-line with the A-level Business Studies Curriculum across the UK.

Our apologies for the videos being only available, currently, in English


Pdf version of presentation

Exercise

Activity 1

A company is considering buying in a new product from a supplier at £350 per unit.

To produce 'in house' the fixed cost per year would be £130,000, and the total variable costs would be £80 per part.

Using the graphical method and the mathematical method, what would be the break-even point in terms of volume and cost for the make or buy decision?

Mathematical Method:

Q = Fc / (R-v)
Q = 130,000 / (350-80)
Q = 482 products

At 482 products, the cost of outsourcing matches the cost of making 'in house'. This is an outsourcing strategic decision point

Graphical Method:

Graph for above exercise

Activity 2

ABC Limited is a manufacturing company. It has been asked by a customer to manufacture a new product. However, ABC are unsure whether they could produce the product in the time or to the quality that the customer needs in such a short period of time. The company has decided to outsource the product in the early stages until they can assure themselves that they can produce the product correctly.

  1. List the non-cost related reasons why the company would outsource the product
  2. List the non-cost related reasons why the company would produce the product 'in house'
  3. List the cost related reasons why the company would outsource the product.
  4. List the cost related reasons why the company would produce the product 'in house'.

Contact Us

Aberystwyth Business School Outreach Co-ordiator: Dr Sohpie Bennett
Email: sob@aber.ac.uk
Faculty Outreach Co-ordiator: Natalie Roberts
Email: nar25@aber.ac.uk

Back to Business Home Page