QUESTION \#5 - Make Vs Buy Gianna, Primo's Chief Marketing Officer, and Marco, the Chief Operating Officer, are arguing over the fate of the Bean Boiler. The Bean Boiler is Primo Caf's most basic model. It is competitively priced at $20 per unit and the company sells 25,000 units per month. Fixed annual costs and variable costs for the Bean Boiler are presented below. Gianna sees the Bean Boiler as a loser. There are lots of competitors that are rapidly eating into Primo's market share - and although sales have been stable, the company's best projections are that Bean Boiler sales volume will decline by 15% year-on-year over the next five years. Gianna wants to pull company manufacturing resources from the Bean Boiler now and invest immediately in a new product - a French press she's designed called the Brassage Frais. Brassage Frais will complement the Caffissimo in the highend market and since it has a unique intellectual property, it is believed that the Brassage Frais will drive the company's growth strategy in the next 5 years. Marco is not convinced. From manufacturing perspective, producing 25,000 Bean Boilers a month is easy. Plus the Bean Boiler pulls in about $6,000,000 in revenue per year. Marco doesn't see why the company should give up the profit for an unproven product like the Brassage Frais. And while Marco concedes there's nothing special about Primo's production process - other companies make essentially the same product in the same way - Marco is convinced it is cheaper to produce in-house than outsource. In fact, when Marco asked you to find a potential outsourced supplier for the Bean Boiler, your best supplier is Legit Manufacturing with a price of $13.50 per unit. Also, Primo Caf will need to purchase tooling (unique tooling, fixtures and gages for production), which will cost Primo $25,000 annually to maintain regardless of volume. From your initial discussions, Legit seems to have the quality culture and experience that is needed to manufacture the Bean Boiler. needed to manufacture the Bean Boiler. Apply the make-buy pillars as presented in class to complete the question below. Complete all calculations in the excel file that you will upload with your exam