Case 5-3

Identification of the problems:
- Outsourcing costs close to $36,000 which includes the 500 drums of mustard, as well as freight.
- On top of those costs, TFL also needs to pay its workers to clean the drums, and pay a contractor to take the bulky drums away.
- An issue with producing the mustard in-house would be the fact that the quality of the mustard might not meet the standard of what was previously used in their products.
- A minor problem would be that it would take more time out of the workers day to focus on producing the mustard, but overall producing the mustard in-house would drastically cut down costs.
Situational Analysis:
- Quantitative analysis: Outsourcing costs include $64 dollars a barrel, with an overall amount of 500 barrels per shipment, which costs $32,000. On top of those costs, there is an $8 freight charge per barrel, which in return costs TFL another $4,000. As well as those costs, TFL also had to pay an outside contractor to dispose of the drums. As well as another $2,000 in purchasing costs and overhead.
- Qualitative Analysis: Do they have the necessary personnel to make a quality mustard product. By making the mustard in-house, it would cut down the lead time of making their products, which in return would help them to get their product to the customers faster (Freight Time). It would make the quality all of your mustard based products higher, due to the fact that you as a company made it yourself instead of trusting an outside supplier.
-Relevant Factors: Space, Budget, Employees, Resources, Suppliers, Cost of mustard seeds(including freight, Farming expenses, learning curve to make the mustard seed plant), No more cost for disposal, Takes more time out of the employees to focus on just producing the mustard, Quality of the mustard as well as other mustard based producst would go up due to organic in house growing.

Evaluation of Feasible Alternative Solutions
- Original Alternative: - Advantages: Less time consuming for employees, gives them the ability to spend more of their time on some of TFL’s other products. Consistent quality, never have to worry about quality assurance, Set schedule for delivery of Mustard. - Disadvantages: Extremely expensive, not only for the mustard but for the freight involved, the disposal of drums, as well as price.
- Alicia’s Alternative: - Advantages: Less expensive, Making it in house (no fear of lack of product/delivery), monitor the workers progress in making the mustard, lower lead time, adds value to the product because it’s made in house instead of bought from a supplier, can test out different kinds of spices to make the mustard better/more