Greely Food in Salt Lake City, Utah, manufactures and markets snack foods. Rita Bailey manages the company's fleet of 200 delivery trucks. Bailey has been charged with “reengineering” the fleet-management function. She has an important decision to make. (Click the icon to view the decision Bailey has to make.) Assume that Bailey's records show the following data concerning Greely Food's fleet: (Click the icon to view the data.) Suppose that Fleet Management Services offers to manage Greely Food's fleet for an annual fee of $274,000. Which alternative will maximize Greely Food's short-term operating income? Complete the following analysis. (Enter a “0” for any zero amounts. Use a minus sign or parentheses for subtracting numbers that are typically shown enclosed in parentheses in an outsourcing decision.) Greely Food Outsourcing Decision Analysis Retain In-House Outsource to FMS Difference Total cost of fleet A More Info – X • Should she continue to manage the fleet in-house with the five employees reporting to her? To do so, she will have to acquire new fleet-management software to streamline Greely Food's fleet-management process. • Should she outsource the fleet-management function to Fleet Management Services, a company that specializes in managing fleets of trucks for other companies? Fleet Management Services would take over the maintenance, repair, and scheduling of Greely Food's fleet (but Greely Food would retain ownership). This alternative would require Bailey to lay off her five employees. However, her own job would be secure, as she would be Greely Food's liaison with Fleet Management Services. Print Done 0 Data Table Book value of Greely Food's trucks, with an estimated five-year life……………..$ Annual leasing fee for new fleet-management software Annual maintenance of trucks Fleet Supervisor Bailey's annual salary Total annual salaries of Greely Food's five other fleet-management employees ……$ 3,500,000 8,400 168,000 64,000 135,000 Print Print Done Done
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