Mt435 - Albatross Anchor Case Study Unit 3 Assignment
Unit Three Written Assignment
Kelli-Michelle Evans
MT435 Operations Management
Kaplan University
May 8. 2013
Introduction
Before we begin, I wish to say thank you on behalf of KU Consulting for giving us the opportunity to present this proposal to your company. We understand that you may not agree with all of the ideas presented. However, we are willing to work with you to come up with solutions to your current issues that work within your budget and thought process. We only ask that you read our proposal and approach it with an open mind.
Question One
1. Cost
a) Cost of Production: At the moment Albatross Anchors produces two types of anchors, the bell anchor and the snag hook anchor, at cost of $8.00/pound and $11.00/pound. The cost of production also includes salaries, utilities, facilities, administrative, insurance, and marketing expenses. Due to that fact that the administrative offices are not run properly, how do you know that clients are paying on time? How do you know that your suppliers are paid on time? This will cost you more in the future due to late fees from suppliers, loss of discounts when buying materials in bulk or worse cancelled contracts and bad credit ratings.
b) Economies of Scale in material purchasing: Economies of scale are reductions in average costs attributable to production volume increases. They typically are defined in relation to firms, which may seek to achieve economies of scale by becoming large or even dominant producers of a particular type of product or service. In this case Albatross Anchor would do well to increase the volume of production of one of the anchors. I say one because at the moment there is 36 hour turn around when switching the manufacturing processes of the anchors. It would be more feasible to concentrate of one instead of both. Wickham Skinner wrote the following in the Harvard Business Review:
“Too many companies attempt to do too many things with one plant and one
Kelli-Michelle Evans
MT435 Operations Management
Kaplan University
May 8. 2013
Introduction
Before we begin, I wish to say thank you on behalf of KU Consulting for giving us the opportunity to present this proposal to your company. We understand that you may not agree with all of the ideas presented. However, we are willing to work with you to come up with solutions to your current issues that work within your budget and thought process. We only ask that you read our proposal and approach it with an open mind.
Question One
1. Cost
a) Cost of Production: At the moment Albatross Anchors produces two types of anchors, the bell anchor and the snag hook anchor, at cost of $8.00/pound and $11.00/pound. The cost of production also includes salaries, utilities, facilities, administrative, insurance, and marketing expenses. Due to that fact that the administrative offices are not run properly, how do you know that clients are paying on time? How do you know that your suppliers are paid on time? This will cost you more in the future due to late fees from suppliers, loss of discounts when buying materials in bulk or worse cancelled contracts and bad credit ratings.
b) Economies of Scale in material purchasing: Economies of scale are reductions in average costs attributable to production volume increases. They typically are defined in relation to firms, which may seek to achieve economies of scale by becoming large or even dominant producers of a particular type of product or service. In this case Albatross Anchor would do well to increase the volume of production of one of the anchors. I say one because at the moment there is 36 hour turn around when switching the manufacturing processes of the anchors. It would be more feasible to concentrate of one instead of both. Wickham Skinner wrote the following in the Harvard Business Review:
“Too many companies attempt to do too many things with one plant and one
References: Russell, R. S., & Taylor, B. W., III. (2011). Operations Management: Creating Value along the Supply Chain (7th ed.). John Wiley & Sons, Inc. http://dechia.free.fr/Prepa%20Agregation/Management/Skinner__1974__The_Focused_Factory.PDF http://www.referenceforbusiness.com/management/De-Ele/Economies-of-Scale-and-Economies-of-Scope.html#b#ixzz2StqFDSZM http://www.theage.com.au/business/mining-and-resources/bhp-sees-lower-iron-ore-price 20130508-2j7lj.html#ixzz2StwYKRAo http://article-library.industrial1000.com/manufacturing_process/20110922-083542 Manufacturing-Process-Improvement-Eliminating-waste-in-waiting