Remake or Buy? Reconditioning Products at Xtra Power Energy Systems

It was a quiet evening in August 2013. Pradeep Dutta (Dutta), proprietor of Xtra Power Group, closed the window of his third floor office in anticipation of the reported thunderstorm and sat on his chair. He was worried. His meeting with Rahul Dev (Dev), assistant manager from Revathi Batteries, earlier in the afternoon, hadn’t gone as planned. Two months ago, the Xtra Power Energy Systems (Xtra Power) division had gone in for a supply chain reconfiguration which had led to a surge in the new lead-acid battery production, making it difficult for Dutta to focus on the existing line of reconditioned batteries. In order to give a boost to the reconditioned batteries business, Dutta and his team were mulling the possibility of outsourcing the reconditioning process to Revathi Batteries. At the meeting, Dev asked for a contract tenure of at least three years at an annual payment of Rs. 15.58 million for a monthly reconditioning of 500 used batteries...