Muenster

1. MAJOR FACTS:

* The Muenster Pump Company has manufactured high quality agricultural pumps for over 40 years.

* The company’s only plant is located in the small Midwestern city of Muenster.

* The company is Muenster’s largest employer.

* Bob Dorf, president of the firm, is the grandson of the founder, Emil Doff.

* Bob and his family, along with key personnel, live in or near the city.

* Cordial relations exist between the firm and the city fathers

* Since its founding, the company has always been as self-sufficient as possible.

* Shortly after setting up business, Emil Dorf had established a foundry to cast pump housings and related items.

* The foundry provides virtually all of the required pump housings.

* Bob Dorfs cousin, Terry, is the supply manager for Muenster Pump.

* Terry is an aggressive and conscientious supply manager. She has reduced material costs from 60 percent of cost of sales to 50 percent in the two years since she assumed responsibility for purchasing

* Union Foundry is trying to sell Muensters pump housing for cheaper than Muenster can make them

* Union will sell the housing which is 60% of Muenster’s housing need for $90 FOB

* Muensters foundry it costs $180 to make the same housing

* Nowhere for foundry employees to work at if foundry closes

2. MAJOR PROBLEMS:

* The Muenster Pump Company wants to maintain or increase profits by reducing production costs.

* Whether to continue making in-house or to buy outside the cast pump housings for the agricultural pumps.

* What are the financial benefits of outsourcing vs continuing to make it,

* Does the Union foundry housing meet the same quality maintenance standard,

* Muenster will not have the same response time to new requirements if they outsource

* Whether or not to dismiss 16 local people who you have no other jobs for

3. SOLUTIONS:

* Do Not Outsource but Investigate for Muenster’s use the new...