Question: Montana Pen Company manufactures a full line of premium writing instruments. IT has 12 different styles and within each style it offers ball point pens, fountain pens, mechanical pencils, and a roller ball pen. <most models also come in 3 finishes- gold silver and black. MP’s Bangkok Thailand plant manufactures 4 of the styles; the plant is currently producing the gold clip for the top of one of its pen styles no 872. Current production is 1200 gold no 872 pens each month at an average cost of 185 baht per gold clip. (1 US dollar currently buys 35 Baht) A Chinese manufacturer has offered to produce the same gold clip for 136 Baht. This manufacturer will sell MP Pen 400 clips per month. If it accepts the Chinese offer and cuts the production of the clips from 1200 to 800 MP estimates that the cost of each clip it continues to produce will rise from 185 baht to 212.5 baht per gold clip.

a. Should MP outsource 400 gold clips for pen style no 872 to Chinese firm? Provide written justification for answer.

b. Given your answer in part a, what addition information would you seek before deciding to outsource 400 gold clips per month to the Chinese firm?