1. What should Mr. Ashendra recommend: Whether the company should go for outsourcing or not?

Everest Tools Company manufactures a line of power and hand tools for industrial and home use that is marketed under its own name. In addition, the company produces parts and accessories for power tools that are marketed by a large retail chain under the chain's name. Everest Tools Company must meet the quality requirements and delivery schedules as established by the chain. During 2001, sales of parts and accessories to the chain exceeded Rs. 50.00 crores. Management of Everest Tools Company believed that sales to the chain contributed significantly to overhead and profit, as well as to stable employment. However, during peak periods of sales, the company purchased parts and accesso- ries from smaller firms for use in its own product line as well as to complete orders for the chain.