TEAM 1

Brenda Watkins – Leader/Organizer

Justin Legere – Leader/Organizer

Chweya Masongo – Summarizer

Jeffrey McCarthy – Techie

BUSINESS VENTURE

OVERVIEW

• SCENERIOS

• IN-HOUSE

• SUBCONTRACTING

• CASH FLOW DIAGRAM

• SENSITIVITY ANALYSIS

• CONCLUSIONS

APEX Space Engineering Co.

• Specialization:

Space exploration vehicles

and lunar atmosphere test equipment.

• 10 Year Contract with NASA for

$11.9 million

• 2 Projects Per Year

SCENERIO

IN HOUSE FABRICATION

Pros:•Complete Production Control•Tax Benefits

Cons:•Liability•Start-Up Cost•Overhead

Sub Contracting:

Pros:•Pass on Liability•No Start-Up•Low Overhead

Cons:•Lack of Production Control

In House Cash Flow:In House Cash Flow

-$1,200,000

-$1,000,000

-$800,000

-$600,000

-$400,000

-$200,000

$0

$200,000

1 2 3 4 5 6 7 8 9 10

Years

Sub Contract Cash Flow

Cash Flow Diagram: Sub Contracting

-$800,000

-$700,000

-$600,000

-$500,000

-$400,000

-$300,000

-$200,000

-$100,000

$0

1 2 3 4 5 6 7 8 9 10

Sensitivity Analysis

Sub vs. In-House Standard Model

0

1

2

3

4

5

6

7

0 1 2 3 4 5Number Projects/Year

Pres

ent W

orth

Cos

t (10

^5)

Sensitivity Analysis: SubContracting

Sensitivity Analysis: In-House

Linear (Sensitivity Analysis:Sub Contracting)

Linear (Sensitivity Analysis:In-House)

Inflation @ 4%

0

1

2

3

4

5

6

7

0 1 2 3 4 5

Number Projects/Year

Pre

sen

t W

ort

h C

ost

(10^

5)

Sub Contracting

In-House

Linear (Sub Contracting)

Linear (In-House)

Inflation @ 1%

0

1

2

3

4

5

6

0 1 2 3 4 5

Numbers Projects/Year

Pre

sen

t W

ort

h C

ost

(10^

5)

Sub Contracting

In-House

Linear (In-House)

Linear (Sub Contracting)

Salary @ 6% Increase

0

1

2

3

4

5

6

7

0 1 2 3 4 5

Number Projects/Year

Pre

sen

t W

ort

h C

ost

(10^

5)

Sub Contracting

In-House

Linear (In-House)

Linear (Sub Contracting)

Salary @ 10% Increase

0

1

2

3

4

5

6

7

0 1 2 3 4 5

Number of Project/Year

Pre

se

nt

Wo

rth

of

Co

st

(10

^5

)

Sub Contracting

In-House

Linear (In-House)

Linear (Sub Contracting)

Materials @ $313,200

0

1

2

3

4

5

6

7

0 1 2 3 4 5

Number Projects/Year

Pre

sen

t W

ort

h C

ost

(10^

5)

Sub Contracting

In-House

Linear (In-House)

Linear (Sub Contracting)

Materials @ $113,200

0

1

2

3

4

5

6

7

0 1 2 3 4 5

Number Projects/Year

Pre

sen

t W

ort

h C

ost

(10^

5)

Sub Contracting

In-House

Linear (In-House)

Linear (Sub Contracting)

CONCLUSIONS

• Sub contracting = low production

• In House = High Production

• http://www.abprocess.com/stainlessmarket.htm

• http://www.ganeshmachinery.com/

• http://www.csupomona.edu/~rosenkrantz/egr403site/egr403projects.htm

RESOURCES