Barvo Carolina Case Study 1
Case Study: Forster’s Market
Carolina Barvo Vilaro,
Professor Eric Bateh
Production Operations and Logistics Management
MAN3505
Florida State College at Jacksonville
ABSTRACT
This paper has the purpose to analyze the case study of Forester’s Market. Through this paper I will answer the questions presented in the case study.
INTRODUCTION
Forster's Market is owned by Robbie Forster. A company specialized in food items, including roasted coffee. He buys roasted coffee from a supplier for $3 per pound and sells 14,400 pounds to his customer every year for $ 7 per pound.
Robbie is in the process to earn more money with his company. One option he is thinking about is to buy a roaster for $ 35,000, which will end up getting un-roasted coffee for $1.60 per pound instead of paying $3 per pound to the supplier. He is also looking into add a new market segment that includes restaurants and coffee shops. He is calculating the selling price to $2.90 per pound.
1. What are the two capacity options that Robbie needs to consider? What are their fixed and variable costs? What is the indifference point for the two options? What are the implications on the indifference point?
Capacity is the amount of product or service that a company can get in a productive unit during a certain period of time. Long-term capacity is that capacity limit, which the possibility of changes is structural and requires heavy investments. This "term" refers to a period of more than two years, and the ability as well defined covers the structure of their own fixed over the possibilities of outsourcing, so it is a roof, and also a limit to the competitiveness of the company's medium-term. The decisions on long-term capacity to have the highest strategic importance: an over-capacity in relation to the post effective demand will mean a heavy parasite burden of amortization of investments and fixed costs; an insufficient capacity will mean the loss of a competitive opportunity
Carolina Barvo Vilaro,
Professor Eric Bateh
Production Operations and Logistics Management
MAN3505
Florida State College at Jacksonville
ABSTRACT
This paper has the purpose to analyze the case study of Forester’s Market. Through this paper I will answer the questions presented in the case study.
INTRODUCTION
Forster's Market is owned by Robbie Forster. A company specialized in food items, including roasted coffee. He buys roasted coffee from a supplier for $3 per pound and sells 14,400 pounds to his customer every year for $ 7 per pound.
Robbie is in the process to earn more money with his company. One option he is thinking about is to buy a roaster for $ 35,000, which will end up getting un-roasted coffee for $1.60 per pound instead of paying $3 per pound to the supplier. He is also looking into add a new market segment that includes restaurants and coffee shops. He is calculating the selling price to $2.90 per pound.
1. What are the two capacity options that Robbie needs to consider? What are their fixed and variable costs? What is the indifference point for the two options? What are the implications on the indifference point?
Capacity is the amount of product or service that a company can get in a productive unit during a certain period of time. Long-term capacity is that capacity limit, which the possibility of changes is structural and requires heavy investments. This "term" refers to a period of more than two years, and the ability as well defined covers the structure of their own fixed over the possibilities of outsourcing, so it is a roof, and also a limit to the competitiveness of the company's medium-term. The decisions on long-term capacity to have the highest strategic importance: an over-capacity in relation to the post effective demand will mean a heavy parasite burden of amortization of investments and fixed costs; an insufficient capacity will mean the loss of a competitive opportunity
References: Bozarth, C., & Handfield, R. (n.d.). Introduction to operations and supply chain management (3rd ed.). Upper Saddle River, NJ: Pearson Prentice Hall.