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 traffic density, Subway, with more than 20,000 out lets in the U.S....

Subway, with more than 20,000 out lets in the U.S., is planning for a new restaurant in Buffalo, New York. Three locations are being considered. The following table gives the facto

OPERATTION MANAGEMENT, DISCUSS THE ADVISABILITY OF USING MODULAR ASSEMBLIES...

DISCUSS THE ADVISABILITY OF USING MODULAR ASSEMBLIES IN MANFACTURING

Locating production and service facilities, if you expand your existing com...

if you expand your existing company by opening a new divition in a foreign country, shouldthe new divistion be staffed by local personnel or by personnel imported from the parent o

Explain personality traits affect management and leadership, Your managemen...

Your management team has been retained by a senior manager who is concerned about the effectiveness of his managers and their leadership abilities. He would like you to develop a t

Describe the growth in the service sector, Discuss the growth in the servic...

Discuss the growth in the service sector and the decline of manufacturing in the United States

Explain what are the capacity requirements, Always Rain Irrigation, Inc., w...

Always Rain Irrigation, Inc., would like to determine capacity requirements for the next four years. Currently two production lines are I place for making bronze and plastic sprink

Explain ennoblement in addition to the primary deliverable, Almost all proj...

Almost all project have deliverables dealing with documentation and customer ennoblement in addition to the primary deliverable

How team structure related to the project managers authority, How is the pr...

How is the project team structure related to the project manager's authority level?

Explain rtp, Orange Company is allocating its advertising budget for its ne...

Orange Company is allocating its advertising budget for its new smartphone targeting graduate and undergraduate students in RTP. The company has invited representatives from the lo

Explain advances in technology have allowed hr services, Advances in techno...

Advances in technology have allowed HR services to be offered more on a self-service basis than in the past. True False

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