Case Study Iii-3make-or-Buy Decision at Baxter Manufacturing Company

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Part A - Case Study III-3Make-or-Buy Decision at Baxter Manufacturing Company

1. What are the arguments in favor of Manufacturing Vice President Moore’s proposal to purchase the manufacturing software from EMS? Moore argues that Baxter Manufacturing Company (BMC) is losing it’s reputation as a world-class parts manufacturer and is therefore implying that the company will lose business unless they purchase the manufacturing software. Moore also thinks that the manufacturing software will improve their manufacturing efficiency and customer service. The vendor, Effective Management Solutions (EMS), has told Moore that the entire system can be up and running in six months, where the estimated time to build an in-house system is two years. So there appears to be a big savings in the implementation timeline. The cost to buy the vendor provided manufacturing software is a fixed $220,000. The estimated cost to build the in-house system is over $400,000. So there appears to be a significant cost savings in purchasing the manufacturing software.
Moore also argues that the vendor system is a better system because it is a mature system that has gone through many iterations of changes based on feedback from hundreds of customers. Moore believes that adopting BMC’s manufacturing process to the vendor software will improve BMC’s operations because of the experience that has gone into the manufacturing software.Moore believes that this system will be successful because he is championing the purchase and will make sure that it works. Moore also argues that the situation at BMC is better suited to adopt a new software package since inventory is under control and they are no longer expediting orders due to capacity issues.
2. What are the arguments in favor of developing the needed systems internally? Collins believes that the EMS manufacturing software is overkill…...

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