The Great Falcon grocery store wants to begin buying several products from your manufacturing company, Greenery, Ltd. These products include two varieties of soup, tomato paste, and a new product that they have nicknamed 'protein sludge', which is similar in nutritional value to a protein bar, but in a paste form. The soup and tomato paste will be existing Greenery products in new packaging, but the protein paste will need to be developed, based only on a homemade product that a Great Falcon executive encountered while on a health retreat. Having noted the 7% annual growth rate in pouch products over the past several years, Great Falcon has decided to quickly begin selling these products, feeling that they missed an opportunity by not selling them previously.

Great Falcon's request of 10,000 pouches by July 1^st(6 months away) will be challenging since Greenery has never made food in pouches. Great Falcon estimates that sales for the first year will be $500,000 total for the pouch products. Greenery can purchase the equipment to package the products for $300,000, including training. The manufacturer has stated that the machinery can be set up and employees trained in 4 months. The machine would have an annual capacity large enough to make four times the amount forecasted for the first year. Alternatively, Greenery can outsource the production and packaging of the products. Capacity is not an issue for outsourcing, as there are several potential suppliers. Assuming sales of $500,000 from Great Falcon in the first year, Greenery's margin will be $100,000 if they make the products in-house and $50,000 if they outsource. Greenery can also choose not to make these products. Greenery's COO is concerned about Great Falcon's perception of the company because Greenery and Great Falcon have faced some inventory problems recently due to poor performance on replenishment orders. Some Greenery products have been out of stock at Great Falcon, while others have gone out of their shelf life due to excess inventory.

As Greenery's COO, you need to make a recommendation to the CEO about what option Greenery should follow. They can produce in-house, outsource production, or pass on the offer. Provide a detailed justification of your decision using material from throughout the SCM program.