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1.

State the business


case Ior option #3,
the PCB In -sourcing
proposal.
In Option#3, Stryker
choose to
manuIacture its own
PCB in its own
Iacility. II Stryker
take the Option #3:


F
acility:The proposed
Iacility would
manuIacture all oI
the various types oI
PCBsrequired by
Stryker Instruments.


Timeline:1)

F
or part oI 2004-
2005, Stryker would
be both
manuIacturing PCBs
andbuying Irom
outside suppliers.2)

Beginning in 2006,
Stryker would be
manuIacturing all oI
the PCBs by itselI.


A
dvantages and
disadvantages:The
advantage is that
Stryker promise to
control over the
quality and
delivery.However,
there exist some
disadvantages:1)

It required the largest
capital outlay.2)

It required the largest
increment to
Strykers headcount
and payroll.
2
.

&se the projections
provided in the case
to compute
incremental cash
Ilows Ior the PCB
project, as well as its
NPV, IRR, and
payback period.


Net Cash
F
low NI
Depreciation

Change in WC
















































-6,187,178
-749,932-
301,3842,166,9103,027,63
83,586,1497,676,861
incremental
cash Ilow
2003(0)2004(1)
2005(2)2006(3)2007(4)200
8(5)2009(6)

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