You are the Vice-President of Manufacturing for a company which manufactures small personal appliances. Your R & D department has designed a revolutionary, new type of electric toothbrush which cleans and polishes teeth at the same time. Your company has applied for a patent to protect the design. But your company has never actually manufactured electric toothbrushes. You have always outsourced the manufacture of toothbrushes to several suppliers with whom you have long standing relationships. You must decide whether to make the brushes in-house or to contract the brush manufacture to an outside supplier. If you manufacture the brushes in-house you must purchase specialized equipment (assets) and hire additional highly-trained specialists to manufacture the brushes because it requires unique skills and talent. As V.P. of Manufacturing, you must do an analysis of the options you have and present it to the Executive Board.

a) Would you recommend to the Executive Committee to make this product in house or to buy (outsource)?

b) Why would you make this recommendation? Explain what the advantages and disadvantages would be of making vs. buying in this particular situation