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considered a change in sourcing of pcb's in MEDICAL PRODUCTS in MAY 2003

purchased from small no. of contract manufacturers


expenses wud increase more than 10 mn in each yr for 2 years as business grows
reasons to change the sourcing
weak financial capital of cm (contract manufacturers)
low quality
bankruptcy chances
bad services, delayed deliveries
option 1
maintain current basic sourcing policy for pcb's but with imp modifications
have extra number of stocks as safety stocks
option2
pick 1 grp from cm and solely take all orders of pcbs from that cm
option3
manufacture its own pcbs in owned facility of 8 acres in kalamazoo MI
once established stryker can supply pcb's to its other businesses as well.
this option promises highest degree of control over quality & delivery
disadvantage is high investment, headcount, increased payroll
1-also it will manufactures various kinds of pcb's so many kinds of manufacturing equipments will be required worth $ 2643258 ( dep 7 yrs)
2-construction of new bldg 30000 sq feet on 8 acres of strykers land
depreciation 30 yrs straight line method
3- site prep, construction charegs- 3030000
4-architectural & engineering costs- 278000
5-furnishing & non furnishing - 126000
6- IT & communication - 210000
depreciation for both 5&6 - 3years
material cost = productsxactual costs
fc beginning of year 2004
v.c would begin from 3rd quarter of 2004
FC+vc represented half of employee compensation n benefits (it this any of our reference while calculations, please re-check)
end of option 3
by 2006- total 56 employess for inhouse production of pcb's
part in-house production will strt in last quarter of 2004 till end of 2005 and 100% in house prod from jan 2006
part pcb production from last q 04 to last mnth of 2005 will be given to CM.
Manufacturing will be 100% capacity in 2009 ( TIFFANY LAURA I hope I got this right please check in the case)
TAX 36%
COST OF CAPITAL 15%
EXHIBIT 4 GIVES ALL INTEREST RATES BUT WE DONT HAVE THE INVESTMENT AMOUNTS SO HOW WILL WE FIGURE OUT THE INTERESTS ???
ABOUT STRYKER
2002 revenues 3 bn
operating prt 507 bn
multiple businesses like ortho implants, med & surg equip, rehab med services
exhibit 1 gvs operating & fin data
Med surg sales in 2002 1.1 bn (increase of 13% over 2001 sales)
global revenues 430 mn in 2002 approx
1-also it will manufactures various kinds of pcb's so many kinds of manufacturing equipments will be required worth $ 2643258 ( dep 7 yrs)
FC+vc represented half of employee compensation n benefits (it this any of our reference while calculations, please re-check)
part in-house production will strt in last quarter of 2004 till end of 2005 and 100% in house prod from jan 2006
Manufacturing will be 100% capacity in 2009 ( TIFFANY LAURA I hope I got this right please check in the case)
EXHIBIT 4 GIVES ALL INTEREST RATES BUT WE DONT HAVE THE INVESTMENT AMOUNTS SO HOW WILL WE FIGURE OUT THE INTERESTS ???

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