Final answer:
Outsourcing has various benefits and drawbacks, such as cost savings versus potential quality risks. MSI should evaluate factors, including outsourcing partner reliability and total cost implications and calculate the breakeven point by comparing in-house and outsourcing costs. Further data like demand projections and contract terms would support a more informed decision.
Step-by-step explanation:
The potential benefits of outsourcing the production of a handheld control module include cost savings on labor, increased efficiency, potential quality improvements by choosing a supplier that specializes in the product, and the ability to focus on core competencies within the company. On the other hand, the drawbacks might involve risks related to quality control, extended lead times, loss of control over the manufacturing process, potential negative impacts on company reputation, and issues concerning intellectual property.
Key factors MSI should consider include the reliability and reputation of the outsourcing partner, the communication and language barriers, the political and economic stability of the outsourcing location, total costs including shipping and tariffs, potential savings, and how outsourcing aligns with the company's long-term strategy.
Calculating the breakeven point involves analyzing the fixed and variable costs of in-house production versus the cost per unit to outsource. It is the point at which the total cost of outsourcing equals the total cost of in-house production. To calculate this, MSI would need to know the fixed costs associated with its in-house production, the variable cost per unit in-house, and the cost per unit for outsourcing.
Additional information that would be helpful to MSI includes current and projected demand for the product, the terms of the contract with the outsourcing partner, the capacity of the outsourcing partner, and the comparison of intellectual property risks.