SummaryThe scenario depicts Wonderful Widgets, a company that specializes in the manufacturing and distribution of a single product, widgets. The company is able to produce widgets using current equipment, facilities, layout and materials and is able to source the product through various suppliers. Recently, it has been noticed that operating costs have been increasing every month. Problem at Hand In the scenario, the Supply Manager is responsible for making all product sourcing decisions. As operational costs are increasing, the Supply Manager must be proactive in finding solutions to reduce these costs and streamline certain processes. This must be achieved by the end of the current quarter. Additionally, the company will see the savings or other increase in operating costs when the quarterly report is reviewed. Options Two options are available to the supply manager; produce the widgets in-house or acquire the widgets through outsourcing to various vendors. Internal Production The benefits of producing widgets internally surround the overall cost of producing them compared to the cost of purchasing them from an external source (Hamlett, 2013). If the purchase price is higher than what it would cost Wonderful Widgets to manufacture the product and the company has the ability to meet the manufacturing standards, then consideration should be given to producing the widgets in-house (Hamlett, 2013). Disadvantages related to domestic production include the possibility of losing alternative sources for widgets, design flexibility and access to technological innovations of other companies and therefore the potential to match a competitor's advantage (Simchi-Levi, Kaminsky, Simchi-Levi, 2008).OutsourcingThe..... .middle of paper ......difference between producing them and outsourcing their production. This makes it unclear whether it is feasible to minimize total costs at landing. Additionally, the assignment instructions were confusing. It was unclear whether to discuss distribution strategies or sourcing options. Works Cited Hamlett, K. (2013). Chron. Reasons for Outsourcing in a Manufacturing Industry Retrieved from http://smallbusiness.chron.com/reasons-outsourcing-manufacturing-industry-1292.htmlLister, J. (2010). Chron. The disadvantages of integrating internal and external suppliers. Retrieved from http://smallbusiness.chron.com/disadvantages-integrating-internal-external-suppliers-36054.htmlSimchi-Levi, David, Kaminsky, Philip, Simchi-Levi, Edith, ( 2008). Designing and Managing the Supply Chain: Concepts, Strategies, and Case Studies, 3rd Edition. New York, New York: McGraw Hill.