Master of Agribusiness / Department of Agricultural Economics / Allen M. Featherstone / Johnsonville Sausage is a privately held company based in Sheboygan Falls, WI. The company has a growing cooked sausage business and is evaluating options to expand capacity. Investing in either of two existing facilities or outsourcing production to a co-manufacturer is being considered in this make versus buy analysis. Intense competition in the category and uncertain raw material markets are considerations in the evaluation. Data used for the analyses were obtained from Johnsonville sources. Assumptions for the “make” analyses were based on existing data where applicable such as labor and utilities, and in other cases assumptions were made based on company knowledge of the process. Johnsonville engineers worked closely with equipment vendors to develop the building and equipment investment plan. Data for the “buy” alternative were received from a prequalified co-packer with advanced manufacturing technology. A Net Present Value (NPV) model is developed for each alternative and used to determine financial viability of each. The models consider varying investment requirements, freight rates and cost of goods for each alternative. Sensitivity analyses are performed to address key variables such as raw material prices and sales volume. The paper concludes that investment in Sheboygan is a viable option; however, the investment poses risk if raw material prices rise and or volume declines from expected projections. Therefore, the recommendation is to outsource production and initiate the Sheboygan project when the co-packed volume reaches 15 million pounds.

Master of Agribusiness / Department of Agricultural Economics / Keith D. Harris / Grain companies in the United States face many different challenges operating in a mature industry with a rich history in agriculture. The purpose of this thesis project is to examine a solution for a grain companies operating in a geographical region with considerable competition. By focusing on differentiation in level of services offered to customers, grain companies can become more profitable. The results of this study offer a solution, which centers on supply chain logistics. The objective of this project is to examine the make vs buy decision for operating a truck and trailer for grain transportation. Determining the decision factors that influence which method is the most optimal and to provide a method of relating the costs associated with each choice. In order to make an economic decision, a Truck Cost Calculator will be created to best reflect the most realistic cost structure for owning and operating a truck and trailer in house during an average crop year for a facility in Pratt County, KS. Other decision factors that are non-economic that provide a strategic benefit to a business will also be part of the project. Using industry data and relevant variables for the cost calculator, the end result is that operating choosing to operate truck logistics in house is the most cost effective option in the make vs buy decision. The optimal choice will differ individually between businesses when a strategic approach is taken to assess whether or not logistics is a core competency in the supply chain.