Make or buy analysis for cooked sausage products

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Show simple item record Ausloos, Peter 2017-01-31T15:53:07Z 2017-01-31T15:53:07Z 2011-05-01 en_US
dc.description.abstract Johnsonville Sausage is a privately held company based in Sheboygan Falls, WI. The company has a growing cooked sausage business and is evaluating options to expand capacity. Investing in either of two existing facilities or outsourcing production to a co-manufacturer is being considered in this make versus buy analysis. Intense competition in the category and uncertain raw material markets are considerations in the evaluation. Data used for the analyses were obtained from Johnsonville sources. Assumptions for the “make” analyses were based on existing data where applicable such as labor and utilities, and in other cases assumptions were made based on company knowledge of the process. Johnsonville engineers worked closely with equipment vendors to develop the building and equipment investment plan. Data for the “buy” alternative were received from a prequalified co-packer with advanced manufacturing technology. A Net Present Value (NPV) model is developed for each alternative and used to determine financial viability of each. The models consider varying investment requirements, freight rates and cost of goods for each alternative. Sensitivity analyses are performed to address key variables such as raw material prices and sales volume. The paper concludes that investment in Sheboygan is a viable option; however, the investment poses risk if raw material prices rise and or volume declines from expected projections. Therefore, the recommendation is to outsource production and initiate the Sheboygan project when the co-packed volume reaches 15 million pounds. en_US
dc.language.iso en_US en_US
dc.publisher Kansas State University en
dc.subject Make vs buy en_US
dc.subject Net present value en_US
dc.subject Cooked sausage en_US
dc.subject Contract manufacturing en_US
dc.title Make or buy analysis for cooked sausage products en_US
dc.type Thesis en_US Master of Agribusiness en_US
dc.description.level Masters en_US
dc.description.department Department of Agricultural Economics en_US
dc.description.advisor Allen M. Featherstone en_US 2011 en_US May en_US

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