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1 . A major corporation that develops and manufactures lawn care products such as fertilizer, herbicide, and seed is evaluating whether it should insource or

1.A major corporation that develops and manufactures lawn care products such as fertilizer, herbicide, and seed is evaluating whether it should insource or outsource the landscaping and lawn care of its corporate headquarters located outside of Augusta, Georgia. Currently, the landscaping is outsourced, and the suppliers performance has been excellent. In the Augusta area, there are a number of landscaping companies that have the capabilities to do this job. To maintain the corporate headquarters grounds, approximately 5,000 hours per year are needed. The annual fixed costs to insource are estimated to be $10,000 per year and the variable costs are $14/hour. Bids from 10 qualified landscaping companies range from a low of $78,000 to a high of $90,000 for a one-year contract. The current suppliers bid is $81,000/year. Apply the insourcing/outsourcing decision process to make a recommendation.

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