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 ?

Explain hr provides managers with data to make decisions, Evidence-based HR...

Evidence-based HR provides managers with data to make decisions, instead of just relying on intuition. True False

Logistics, Ask question #Minimum 100 words acceptedTopic 2: Logistics Logi...

Ask question #Minimum 100 words acceptedTopic 2: Logistics Logistics is the management of the flow of goods, information and other resources, including energy and people, between

Application of transportation models, Application of Transportation Models:...

Application of Transportation Models: 1. Transportation  Management  solution allow  importers exporters  and logistics providers to  manage the spiralling costs associated wi

Capacity analysis, Paradise land management case study

Paradise land management case study

Explain attack advertising, In 2007, the Cartoon Network was fined for publ...

In 2007, the Cartoon Network was fined for public disruption of the Bostonian transportation system while using a new form of public relations called: Answer > Guerilla advertising

Which one technique i recommend is because, Complete the below table. Which...

Complete the below table. Which one of these techniques would you recommend to use and indicate your rationale. Technique Ave Bias Ave MAD MSE Ave MAPE Naïve 4 Per MA Exp Smooth Th

How much must a company pay to keep a specially-skilled, How much should a ...

How much should a company pay to keep a specially-skilled worker? Why? How would you determine the amount to pay to keep such a worker? Explain (again, use textbook concepts) Wh

Describe linear programming problem, Swearingen and McDonald, a small furni...

Swearingen and McDonald, a small furniture manufacturer, produces fine hardwood tables and chairs. Each product must go through three stages in the manufacturing process - assembly

Explain work breakdown structure, Work breakdown structure

Work breakdown structure

Explain value-based and manufacturing-base, Discuss how a fast-food restaur...

Discuss how a fast-food restaurant could measure its quality effectiveness using each of the following definitions of quality; product-based, user-based, value-based, manufacturing

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: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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