Based on this table, the supplier to be used is PC Device, based in Singapore. This decision is based only price information, and assumes that the quality of the covers will be sufficient to meet Omega's demands (a concern with any of the suppliers). In addition, qualitative factors such as the increased logistical difficulties associated with using a supplier located so far away should also be taken into account, although PC Device's track record is, at this point, sufficient to make it an acceptable supplier.
Based on this analysis, the company should purchase the covers from an outside supplier since there is considerable cost savings involved. However, the ability to produce the covers in house results in greater capacity, which means that the company would be able to expand its sales to meet increased demand if the product does well in the market. Such an increase would result in additional costs being incurred from outside suppliers. In addition, quality is better controlled when parts are produced in-house; this should also be taken into consideration when determining whether to manufacture the covers or have them brought in from a foreign supplier.
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