Please answer the following questions in your memo: 1

Subject:FinancePrice: Bought3

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Please answer the following questions in your memo:

1.   Utilize NPV as one of the tools to assist in the decision to “stay in the US” or “outsource to China.” Calculate Scotts’ NPV for each of the following two options--continue production at Temecula or outsource to China! Please note--follow the helpful hints below because some of the inputs to the problem are different from the actual case.

2.   List and rank the factors that you can quantify which would most affect the project's outcome. Complete a sensitivity analysis (+ and -) on at least ONE of these factors for each scenario, Temecula, and China.  For example:

·       Transportation cost projections

·       Labor cost projections

·       Safety stock implications

·       Electrical cost assumptions

·       Impact of a 10-year analysis

·       Many other items!  (Note: You cannot use exchange rate fluctuations of the Yuan and the dollar).

3.   Assess qualitative factors that can also impact your decision utilizing one of the frameworks listed below: You must indicate which framework you have chosen.

·        “Strategic Sourcing from Periphery to Core,” Gottfredson, etc. approach

·       “Why Outsource?” Lynch approach

·       “Sourcing Decisions in a Supply Chain," Chopra approach

·       Make vs. Buy Analysis Matrix presented by Fine in Clockspeed (from SCM 800)

·       Some other frameworks you prefer—this item must be pre-approved by me prior to submittal.

1. Based upon Questions 1-3 above, carefully explain and outline your recommendation and evaluation.