lMake or Buy Analysis Worksheets Student Names and ID: Deliverable Name: Applicable? {Yes/'No} Consideration Applies to Make or Elm,r or Both why? Cost Control over Quality Control over TimefSchedule Availability of Suitable Suppliers Utilization of project team's expertise and time Is there proprietary information to protect? Is it a highly customized item? Utilization of specialized suppliers Procurement Flexibility Inadequate technical or managerial resources Capacityr Small volume requirements Alignment with corporate strategy Other Case Study - Make or Buy Analysis at GE Motors Derrick is a project manager at GE Large Motors and had just received a new orderfrom Shell for six large electric synchronous motors. Each motor will have a horsepower of25,000 and will be used on a compressor skid for this oil and gas client. Delivery for all six machines must be within 18 months of today [Jan 5, 2019}. After reviewing all of the project documentation, Derrick notes that each motor is priced at $1.2 million USD with a profit of $325,000 each if everything progresses according to the plan. The motor is comprised of four major sub-assemblies including the stator, rotor, conduit box and cooler. Rotor CondmtBox The rotor, stator and conduit box are all a proprietary design and are always made \"in house\". The stator frame and cooler utilize the same labour skills to produce. Luckily, the cooler design is not considered to contain any trade secrets and is sometimes an item that GE outsources to one of a few trusted vendors as the need arises. Outsourcing does come with a cost: to make the cooler \"in house\" forthis size of motor the cost is $180,000. When a cooler of this size is purchased, the cost is usually about $250,000 per unit. Derrick needs to do his best to maintain prots when completing his projects. One of the first things Derrick does on this project is to complete his rough manufacturing plan to make sure that he can have the machines completed within the 18month deadline. His rough plan shows that there is just enough time to get these units completed by the deadline: esource Jan --Mlan Feb __ am\"- 4 4 5 Stator A 1 Conduit Baxlc Cooler #1 'Number in cell indicates which motor in sequence llst, 2nd, 3rd, etc.) Page 1 of 2 Derrick is relatively pleased with his plan as it gets all the machines for Shell built within their desired timeframe. This plan will allow Derrick to keep a close eye on his team to ensure top quality products are manufactured. As Derrick was admiring his manufacturing plan, Kevin from marketing stopped by his office to let him know he may need to do some additional planning. The marketing team is working on an order for an additional three motors of similar size and scope to the Shell project. These units would be sold to Valero Energy and would also be due in June 2020. It is expected that confirmation ofthis order would be expected within the next four months and Kevin estimates there is a 50/50 chance that they will land the order. The price and profit margins of these additional machines would be the same as on the Shell project. Derrick is excited about the possibility of the new order with Valero Energy...but knows he has some work ahead of him to see how it can be accommodated and meet the customer expectations. LL.- \f