1. You manage a company that produces medical laboratory equipment. You have until now hired and managed your own salesforce. A new CEO has taken over the company and has directed you to outsource the selling activities. You are concerned about this new direction and want to demonstrate your position to him using a quantitative approach.

Currently, the company pays each of the 10 salespersons $60,000.00 per year and also incurs a total $20,000.00 in insurance expenses for all of them. Additionally, the company pays them a 2% commission on anything that they sell. The company plans to pay its external salesforce 6% in commission only.

At which sales volume does outsourcing make economic sense?