Who are the stakeholders and what are the ethical considerations in this situation?

Dave Patch, CEO of Patch’es Patches Accessories, is trying to decide if it makes sense to outsource their new metalized (super shiny) patch manufacturing. Currently, Dave employs three”special patch makers”each with an annual salary of $34,150. In addition, Dave estimates the cost per patch to make due to the cost of disposing of the excess material(considered “hazardous” by EPA) is around $7.49 each. Universal Patchers, a firm located in Mexico that does not have to abide by the EPA of the United States claims that they can produce the same patch for a fixed (one time per year) fee of $95,000 and will charge only $6.11 per patch (and that includes delivery). Last year, a total of 3000 special patches were produced by Patch’es Patches. Be sure to show your work as to how you got the answer for EACH question.

1) What was the total cost Dave Patch experienced last year due to the special patch production?

2) What would the cost have been if Dave would have used Universal Patchers last year?

3) What is the indifference quantity between the two alternatives?

4) If Dave expects the special patch demand to be 10,000 orders next year, should he use Universal Patchers? In doing this, how much would he save over the alternative?

5) Who are the stakeholders and what are the ethical considerations in this situation?

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