1- FlexCon should keep its family of pistons in-house. In fact, if it outsources its pistons, it will save money the first year- about $30,000 before tax and $18,000 after tax. However, the second year, Flexcon will lose a significant amout of money- about $124,200. Based on the case, “once a firm outsources an item or service, it usually loses the ability to bring that production capability or technology in-house without committing significant investment.” So, the savings brought by outsourcing the pistons manufacturing in the first year will not be useful because it will be used to cover a part of bringing the manufacturing back in-house. In addition, the company cannot keep the pistons manufacturing outsource because FlexCon will lose …show more content…

* A group of managers who will know the internal costs

5- There are many major issues involved with deciding to insource or outsource and how to obtain the correct information. In this case FlexCon’s group of engineers, managers, and employees are contemplating outsourcing their pistons for all type “R” engines and using the space where they used to make these parts for research and development. They believe focusing on new research to discover new process layouts and technology will prove beneficial and not leave them behind the competition. The issues faced are the same issues we have talked about previously, but they had to gather analytic information about themselves first and then the outsourcing suppliers they were planning to use. Another major issue was that, if they choose to outsource, the space where they once produced that specific piston will be turned into an R&D facility. This would make trying to produce the piston in-house again a huge investment in time and money. The best decision making tool they used was developing a key factors table of the “pros and cons” of each decision. Finally, FlexCon had to compare the cost and savings in the future for insourcing and outsourcing to develop a decision. All factors have to be considered on a decision of this magnitude. Outsourcing this piston could