BERGERAC SYSTEMS112-MAYANK PANDEY

560-VINEET HEJIB

OVERVIEW

Pet diagnostics market

Adoption of in house lab equipment

Product OmniVue Diagnostic instrument

User friendly

Virtually no training needed

Good quality and accuracy

THE PROCESS OF PRODUCTION

Instrument production was assembly line operation

Cartridge production was injection moulded plastic pieces

Challenge of exploring the opportunities

Problems with suppliers Little buying power

Petrochemicals as key inputs

Uncertain economic environment

Capacity constraints

BUILD VS BUY ISSUES

Buy opportunity Purchase prize = $5.75 per month

8 moulding presses

Cycle time = 75 seconds

3 shifts and 5 days working a week

Revenue accounted for = 50%

Acquiring would redue overhead

Pay back option = 5 years

Build opportunity 4 moulding presses

New machine with cycle time = 70 second

Machine uptime = 95%

Savings = 57 cents per unit

Additional staff needed for training

Setup time = huge

Payback time = 16 months

BUILD VS BUY CRITERIA (FROM RAVI VENKATESAN ARTICLE)

SOME ANALYSIS

Net income = $6616000

parameter Build Buylabour costs 1087000 1143600Raw material cost 3560156 3675000Reagent costs 5390625 5390625net overhead 1073400 1759500consultation cost 90,000 0Annual operating cost 11201181 11968725

SAVINGS AND OTHER COMPARISON

parameter Build Buycartridges generated 4687500 4687500cost / unit 2.389585 2.553328delivery cost 0 0.15net cost / unit 2.389585 2.703328current cost 2.96 2.96savings 0.570415 0.256672net savings @ 4687500 units 2673819 1203150net capital requirements 3607000 5750000Break even volume 6323470 22373541break even time @ 4687500 units 1.349007 4.773022

CONCLUSIONS & RECOMMENDATIONS

Resources would be easily gathered

Families are strategic

Investment could result in economical savings

Pay back period is lesser

Hiring and training would be more complex though

Let it buy its cartridges

Give proper training

Recruit experienced personnel

THANK YOU