Abstract

Pradeep Dutta (Dutta), proprietor of Xtra Power Group, found himself on the horns of a dilemma. Dutta had recently reconfigured Xtra Power Energy System’s (Xtra Power) supply chain. The reconfiguration had resulted in a lowering of lead times and increased production, making it difficult for the company to focus on the line of reconditioned batteries. Dutta was considering two options: 1. Hire Revathi Batteries (Revathi) to manufacture its reconditioned line of batteries. 2. Rent an adjacent facility and start reconditioning the batteries on its own. However, Revathi Batteries insisted on a contract of at least three years for an annual payment. On the other hand, if Xtra Power went ahead with the other option, it had to incur significant expenditure on procuring machinery, equipment, etc.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand issues related to the remake or buy decision (using transaction cost theory).
• Understand issues and challenges in sales and operation planning.
• Understand issues and challenges in managing a reverse supply chain.

Keywords

Operations planning, Remake or buy decision, Transaction Cost Theory, Supply chain management, Reverse supply chain, Product reconditioning, Supply chain sourcing in remanufacturing operations, Core competency assets, Transaction Cost economics