120 likes | 269 Views
Team Economic Analysis: Make In-house vs Outsource (5-Year Plan). Organization, tech, summarizing: Chris Koszo Holly Miller Liliana Raigosa. Own an engineering firm…. Print engineering drawings in-house?. Outsource print jobs?. Problem. In-house. HP 4000-Series Plotter Considerations
E N D
Team Economic Analysis:Make In-house vs Outsource (5-Year Plan) Organization, tech, summarizing: Chris Koszo Holly Miller LilianaRaigosa
Own an engineering firm… Print engineering drawings in-house? Outsource print jobs? Problem
In-house • HP 4000-Series Plotter • Considerations • Have to purchase • Ink Costs • Operator costs • Salvage value • Space • Drawbacks • High initial cost • Operating costs • Maintenance • Floor space needed • Benefits • Fast turnaround time • Great quality control
Outsource • To Mission Reprographics • Considerations • No initial cost (pay-as-you-go) • Have to proof • Need delivery • Our firm not self-reliant • Benefits • No initial cost • No printing hassles • No floor space needed • Drawbacks • Slower turnaround • Reliance on delivery • Questionable quality
In-house • Purchase price • Supplies cost • Maintenance cost • Operating cost • Operator cost • Salvage value • Inflation Outsource • Base printing prices • Additional costs • Tax • Shipping • Inflation Basic costs we are comparing
Basic Assumptions 5-Year timeframe for analysis 6,000 (24x36) pages printed annually In-house and outsource = same product Steady 3.00% inflation rate
In-house Costs Per-Year =($3,329) ≈($450) ≈($5,400) ≈($620) ≈$3,000 • Buy plotter @ $12,000 (pay off in 5 years @ 12% interest)--------------------------- • Maintenance (cleaning & parts/Labor)--- • Supplies (Ink, Heads, Paper)---------------- • Operation (Manpower, Utilities)------------ • 5-Year Salvage Value--------------------------- Total 5-year Cost =($45,954)
Outsource Costs Per-Year ≈($7,600) ≈($360) ≈($420) ≈($587) ≈$880 • Base Bond prints (6,000 prints @ $1.20)-- • Plot files---------------------------------------------- • Staples------------------------------------------------ • Sales Tax--------------------------------------------- • Shipping--------------------------------------------- Total 5-year Cost =($49,700)
What’s the best deal? Clearly, in-house costs less per project length (5 years) $45,954 vs $49,700 Without sensitivity analysis, in-house is the better choice
Sensitivity Analysis Winner In-house Outsource In-house Outsource Outsource • Varying interest rate (3.00% default) • Down to 2.50% OR up to 3.50%---------------------- • Supply cost goes up ($5,048 default) • Up to $6,000----------------------------------------------- • Maintenance cost goes up ($450 default) • Up to $600-------------------------------------------------- • Base printing and additional costs fall • Down $.20 per-page and $.15 per staple----------- • Plotter credit int. rate goes up (12% Default) • Up to 19%---------------------------------------------------
Conclusion After doing sensitivity analysis, in-house is still a better choice. Outsourcing would most likely only become a better choice if print shops started charging around 15% less (perhaps due to recession becoming really bad)
Resources Holly’s records, invoices etc. Mission Reprographics Plotter retailers (Internet, local shops) Job statistics & postings for “print machine operators”