Albatros Unit 3

Unit three Written Assignment

Tenice Jones

MT435 Operations Management

Kaplan University

June 2, 2013

Introduction

Albatross Anchor is a small manufacturing company that is family owned and sells at only a wholesale level but has been faced with many operational challenges due to inefficiencies with the facility, with a floor plan that lacks flow and outdated machinery and the processes in place. Albatross Anchor’s is competitively priced with their different types of anchors but the profit margin is lacking due to operational issues. KU Consulting is stepping in to take Albatross Anchor’s to the next step in successful manufacturing by correcting the operational snafus and bringing them up to the competitive level on their profit margin.

Question One

Based on the information presented in the scenario/case study discuss Albatross Anchor’s competitiveness in relation to (please address all items in the below list and provide support for your conclusions):

1. Cost

a) Cost of Production:

The cost of manufacturing Albatross Anchors is $8.00 per pound for mushroom/bell anchors and $11.00 per pound for snag hook anchors. The selling price is the same as the competetiors; however, because of some of the manufacturing issues, Albatross Anchor’s is making sometimes as much as 35% less than the competitors. Brian Bass (2013) states, “In order for a company to have long-term success and survive as a business, the company must eventually have profits” (¶1). With other companies make more profit, it will be hard for Albatross Anchors to stay afloat with a substantial change.

b) Economies of Scale in material purchasing:

“Economies of scale are factors that cause the average cost of producing something to fall as the volume of its output increases” (Economist, 2008, ¶1). By purchasing materials in bulk Albatross Anchors will use the economies of scale. It may cost a little more but they will get a greater amount which they can turn...