Gaga

Stryker Corporation:

In-sourcing PCBs

Stryker Corporation:

In-sourcing PCBs

Cerutti, Carolina Del Valle

Repalde, Angie

Samour, Diego

Zambrano, Fátima

Daniel Ariza Naranjo

Evaluación financiera de proyectos

UNIVERSIDAD DE LA SABANA

ESCUELA INTERNACIONAL DE CIENCIAS ECONÓMICAS Y ADMINISTRATIVAS

Chía, Noviembre de 2015

Stryker Case Questions 

1. State the business case for option 3, the PCB InSourcing proposal. 

Option #3 was for Stryker Instruments to manufacture its own PCBs in its own facility near company headquarters in Kalamazoo, Michigan. Once such a facility was up and running, it might be expanded to supply PCBs to other Stryker businesses as well.

The requierements to accept this option are the following:

- the larget capital outlay of the 3 options

- the largest increment in headcount and payroll

- it would have to obtain numerous approvals

- a new building

- a growth in the production volume

- new production costs: materials, variable and fixed costs

- payment conditions of: 120 days

Of all the options this one was the one that promised the highest degree of control over quality and delivery.

2.Use the projections provided in the case to compute incremental cash flows for the PCB project, as well as its NPV, IRR and payback period. 

The projections in the case shows Instruments’ expected expenditures on PCBs for the year 2004 to the year 2009 under the old sourcing strategy using contract manufacturers. These projections of expenditures include growth in volume and anticipated increases in the suppliers’ prices. Moreover, the expected production schedule for the new facility has also been projected. Projection also divides the manufacturing costs into three types, materials, fixed and variable costs. The summary of the projected fixed costs, includes inflation, wage increase and depreciation. Using these projections the net earnings of this project is calculated. The decrease in purchases...