A USHospital System Is Considering Outsourcing a Portion of Its Diagnostic

question 14

Multiple Choice

A U.S.hospital system is considering outsourcing a portion of its diagnostic workload to a medical consulting firm based in India.In the United States these diagnostic services,done internally by the hospital system,cost $700,000 per year.The consulting firm would charge $400,000 per year for the same workload.In addition,the hospital system expects to spend $50,000 per year in managerial oversight,$8,000 per year administering the contract,and $125,000 to initially train the consulting firm's staff (amortized over five years) .What is the total annual outsourcing cost during the first five years?

• A) $400,000.
• B) $483,000.
• C) $578,000.
• D) None of the above.

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Definitions:

Virtual Organization

A network of continually evolving independent organizations that share skills, costs, and access to one another’s markets.

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Businesses that operate on their own, without being owned or controlled by a larger corporation.

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The ability to use both the right and left hand equally well or, in an organizational context, the capacity to balance exploitation and exploration activities effectively.

Virtual Organization

An organizational model that operates primarily through digital means, with team members collaborating remotely and often across diverse geographical locations.