Husky Injection
According to the information in this case (exhibit #6), Husky charges for its product 200,000$ higher relatively to competitor’s product. For answering this question, whether the premium above is justified from the customer’s point of view, the following calculation will be made:
Part 1:
Calculating the amount of days it will take to product the same amount of products with the competitor’s machine:
Husky’s Machine Competitor’s Machine
Cycle-Time [sec] 10.4 11.8
Work per day [hours] 22.3 18.9
Products per day
Products per year (Irrelevant)
Part 2:
Calculating the amount of days for producing the same amount of products that produced by Husky’s machine in a year:
Part 3:
Calculating the cost for producing the same amount of products that is produced in a year – 365 days – by Husky’s machine and within 488 days in the competitor’s machine, for producing the same amount of products.
The information in the case provides very limited data regarding both the constant and the variable expenses of the production process. As a result, the next calculation assumes the constant expenses are low relatively to the variable expenses.
Thus, the saves costs can be done while using the two values above (365 and 488), namely the usage of Husky’s machine saves relatively to the usage of the competitor’s machine.
Husky’s machine costs, less than the competitor’s machine.
Thus, Husky injection molding systems do worth the premium price the company charges.
Part 1:
Calculating the amount of days it will take to product the same amount of products with the competitor’s machine:
Husky’s Machine Competitor’s Machine
Cycle-Time [sec] 10.4 11.8
Work per day [hours] 22.3 18.9
Products per day
Products per year (Irrelevant)
Part 2:
Calculating the amount of days for producing the same amount of products that produced by Husky’s machine in a year:
Part 3:
Calculating the cost for producing the same amount of products that is produced in a year – 365 days – by Husky’s machine and within 488 days in the competitor’s machine, for producing the same amount of products.
The information in the case provides very limited data regarding both the constant and the variable expenses of the production process. As a result, the next calculation assumes the constant expenses are low relatively to the variable expenses.
Thus, the saves costs can be done while using the two values above (365 and 488), namely the usage of Husky’s machine saves relatively to the usage of the competitor’s machine.
Husky’s machine costs, less than the competitor’s machine.
Thus, Husky injection molding systems do worth the premium price the company charges.