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 ?

Contrast on the strategy views of porter and mintzberg, Contrast the strate...

Contrast the strategy views of Porter and Mintzberg.

Explain stanley milgram''s famous experiment, Describe Stanley Milgram's fa...

Describe Stanley Milgram's famous experiment. What are its most significant implications?

ERP, DETAIL THE WORKFLOW OF HRM THAT DEPLOYES ERP

DETAIL THE WORKFLOW OF HRM THAT DEPLOYES ERP

Explain develop an emergency evacuation plan, Develop an Emergency Evacuati...

Develop an Emergency Evacuation Plan Explain what disaster(s) you might experience and what plans you would put in place to protect yourself, your possessions, and your loved on

What needed to accurately predict capacity, 1) A process oriented layout wi...

1) A process oriented layout will minimize the total time spent on setting up machines? 2) By increasing the capacity of an operation you improve its efficiency. 3) Standard

Operation function, meaning of operation function in operation management

meaning of operation function in operation management

Define how you would decide the number of seats, During busy periods, a new...

During busy periods, a new customer walks into LHS every 15 mins. (with a standard deviation of 15 mins). At SHC, a customer walks in every hour (with a standard deviation of 1 hou

An American Tragedy: How a good company died, What is the best alernative c...

What is the best alernative course of action?

Explain concepts in the world of marketing, In the world of marketing, ____...

In the world of marketing, _____ are ideas about products or services. (Points : 3) concepts notions perceptions impressions theories

Illustrate performance dimensions for operational strategy, Illustrate the ...

Illustrate the performance dimensions for operational strategy? Performance dimensions for operational strategy: • Quality for illustrations Marks and Spencer, Thornton’s,

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