Question by adnanr: NATIONAL SEEDS RESEARCH AND DEVELOPMENT CENTER?
NATIONAL SEEDS RESEARCH AND DEVELOPMENT CENTER
(A CASE STUDY IN MAKE/BUY DECISION):
In early January, 1979, NSRDC was organizing an international symposium on the hybrid of a cereal- a subject of considerable topical interest. About 500 delegates from all over India and some other tropical countries were to take part in scientific deliberations spread over six sessions for three days. In fact, NSRDC was hosting this and was able to draw many experts in the related fields of research to reach some consensus of opinion and conclusion over divergent views supported by experience and findings in different countries at different times.
In this connection, the organization required 500 cozy cushioned chairs with extended arms- support fitted with folder retainer platforms and covered trays for cigarette ashes, especially designed for the purpose. The funds were available, but time was too shot for manufacturing and ordering.
The organization had a medium –size carpentry workshop equipped with modern gadgets and other facilities. But the skilled hands to complete the job in time were considered insufficient. The extra labour bills for overtime payments were calculated and considered to be higher than the vendor’s extra charges for this rush order.
Two competent suppliers specializing in the furniture and furnishing trade came with identical offers of Rs. 300 per chair, but added an extra cost of Rs. 50 per chair for this emergency purchase. Both of them, however, pre-conditioned their quotations with a price escalation clause and subjected supplies to the availability of power.
The grandiose symposium hall was contracted to a well-known firm of interior decorators and lighting and other arrangements were similarly contracted to be completed before a target date.
At the date of the symposium drew nearer, the materials manager of NSRDC was one day summoned by the chief scientific officer of NSRDC. Dr. P N Dhar to his office, who was playing the key role of a coordinator of this scientific symposium. Between them, conversation followed as below:
Dr. Dhar: “Welcome, Mr. Jagamohan, to my office. You must have guessed how anxious I am to now about the details of the completion of all jobs necessary for the symposium. I think, you appreciate that we can’t take any chance about anything. Give all of them a hot chase, if any job is not ready for completion before the target date.”
Mr. Jagamohan: “Yes, Sir, that’s all too right. But I am in hot soup with 500 chairs. The suppliers are charging us too high prices for this rush job and our carpentry shop is incapable to assume responsibility even with over time due to shortages of skilled labour. And the time is too shortly”.
Mr. Dhar:” Make sure that there is no failure, either you buy from outside or make them in our workshop, but remember, the deadline is fixed. And above all you must assure me of your prompt decision and action in the matter.”
Mr. Jagamohan: “I can very well understand your point. I must anyway shoot this trouble out and actually don’t allow time to slip off my hands Rest assured that thee will be ready before the date “.
Thus, assuring the chief scientific officer of ND\SRDC, Mr. Jagamohan left the chief’s office, but was in a fix to make a firm decision.
Question
1.Suppose you are the material manager of NSRDC, would you prefer to make these specially designed cushioned chairs and take the risk (since they are not readily available in the market) of making these in your own carpentry workshop or buy from outside manufacturers on order. Consider the time element in this case as most important and costing of manufacturing and ordering identical for all practical purposes. Also consider whether you will take a decision for making them partly in workshop and buy partly from either from one or both suppliers, ordering cost being the same, in light of the assurances given to the chief scientific officer of NSRDC by Mr. Jagamohan.
Best answer:
Answer by Wylie Coyote
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