Munster Pump

Case Name: Munster Pump

I. Major Facts

The Munster Pump Company has manufactured high quality agricultural pumps for over 40 years. The company is Muenster’s largest employer. The firm’s only plant is in the small Midwestern city of Muenster. There is a cordial relationship between the Munster’s Pump Company and the city officials. Emil Dorf has established a foundry to cast pump housing and today the foundry provides virtually all the required pump housings. The firm has always been as self sufficient as possible. Terri is an aggressive and conscientious buyer. Since Terri has been working here the materials cost has decreased from 60 percent to 50 percent in the two years since she assumed responsibility for purchasing. Ned Dorf, stated that “the company produces a quality housing that is not equal in the industry, and is one of the primary keys to our success”. A representative of Union Foundry claimed that new development in casing pouring allowed his firm to offer extremely attractive prices.

II. Major Problem

Terri faces the difficult decision of whether to outsource housing or to continue to produce these parts in house. She has to decide within herself the political, human, and cost factors in her decision whether or not to make the casting in house or to outsource. Ned Dorf, rejected Terri’s idea and was not at all enthusiastic about Terri’s efforts in this area of the business. Ned replied to Terri, there is something else involved. We have 16 men working in that foundry if we stop making our own housing, we’ll have to close down the foundry and there is no place for these men to work. Terri thought that discretion would be the better part of valor. Terri wants to produce the casting housing internally in its own foundry.

III. Possible Solutions/Alternatives

A. Solutions: Ned Dorf is apparently experienced in this area of the business and therefore should not allow Terri to outsource to Union Foundry. He stated “the company...