User Account

All Pages

Makw or to Buy ?, Operation Management

Assignment Help:
• ABC Ltd. is in the business of manufacturing one type of valves for last 3 years.
• Their sales have grown from 10,000 to about 50,000 valves per month.
• Now they are planning to expand and produce different varieties of valves.
• They have a plant of 50,000 sq. ft. If they continue manufacturing of all the varieties in
house, they would need another 50,000 sq.ft. of the area.
• The land prices in the area have more than doubled in last 3 years.
• The company is currently facing the problem of quality complaints which have gone up from
about 0.2 % in previous 2 years to 0.5 % this year.
• While, the workers complain about overwork, the overtime cost has increased 3 times.
• The Director – Operations called a meeting of all the department heads to discuss about the
expansion. The following data were presented by the team.
?Sales Forecast, as presented by the Marketing Manager. ? Year 1: 300,000
? Year 2: 500,000 ? Year 3: 700,000 ? Year 4: 900,000 ? Year 5: 1000,000
?Manufacturing Cost, as presented by the Production Manager.
? Supervisor Salary: Rs 5000 per month with 10% increase per annum.
? Direct Labor Cost: Rs. 4 per unit, with 10 % reduction in second year, no
change in 3rd year and increase of 10 % every subsequent year.
? Indirect labor cost: 50 % of direct labor.
? Material cost: Rs. 14 per unit with an increase of 10 % every year.
? Power and fuel cost: Rs. 2 per unit with increase of 10 % every year.
? Buying a new machine: Rs. 50 lac. With usable life of 5 years.
?Procurement cost, as presented by the Purchase Manager.
? Component price from supplier : Rs. 20 for the first 2 years with an increase
of 10 % every subsequent year.
? Transportation cost : Rs. 2 per unit for the first year with increase of Rs. 0.20
every subsequent year.
? Inventory cost ( storage cost): 5 % per year of the basic material cost.
• Questions:
1. Based on this data, is it economical for ABC Ltd.to go for buying the product from
market or manufacturing in house.
2. What other factors should ABC Ltd. look at for making this decision?

Related Discussions:- Makw or to Buy ?

Compute the gagne-briggs, Critically evaluate the Gagne-Briggs (Gagne sound...

Critically evaluate the Gagne-Briggs (Gagne sounds like Gone-Yea. Briggs rhymes with "bigs") theory of instructional design Is it complete; what is missing; how would you change i

Rock’n Bands: A Project Management Decision-making G, Ask queRock’n Bands: ...

Ask queRock’n Bands: A Project Management Decision-making Gamestion #Minimum 100 words accepted#

Explain oriental express restaurant concept, Owner Kay Fay is considering f...

Owner Kay Fay is considering franchising her Oriental Express restaurant concept. She believes people will pay $5.50 for a large bowl of noodles. Variable costs are $2.75 a bowl. F

Explain technology-intensive method of production, A production method that...

A production method that relies on large quantities of machines and equipment and smaller quantities of labor is referred to as a 1. variable-input-intensive method of productio

Explain why are unions exploring new collaboration solutions, Why are union...

Why are unions exploring new collaboration solutions in the face of economic/work adversity, and how did Saturn's ambitious Quality of Work Life (QWL) program address these factors

Explain it projects that should be a part of bill''s it plan, List and desc...

List and describe (in two or three sentences each) three IT projects that should be a part of Bill's IT Plan - one project to support each area and/or process identified in above

Explain the upper or lower control limits for a mean chart, The overall ave...

The overall average on a process you are attempting to monitor is 50 units. the process standard deviation is 1.72. Determine the upper and lower control limits for a mean chart, i

Resource utilisation & work in progress in organisation, What effect does y...

What effect does your organisation's facility layout have on the following (where appropriate): inter-process movement; health & safety; congestion; resource utilisation; work-in-p

MB0044, What do you understand by “line balancing”? What happens if balance...

What do you understand by “line balancing”? What happens if balance doesn’t exist?

Computer the schedule variance schedule performance index, A project to bui...

A project to build a new bridge seems to be going very well since the project is well ahead of schedule and costs seem to be running very low. A major milestone has been reached wh

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd