Operation Management

Do you agree with the argument/logic that led API in 1962 to consolidate its European (continental) production into a single facility?

Yes, because of the reasons that the:

* Alden’s Europe sales were growing at the rate of 45% each year and this projected volume of sales cannot be prepared in the existing plant.

* Expansion in the existing plants and equipment is greater than the API’s total investment in Europe.

* The risk of centralized manufacturing would be lowered in Europe as compared to United States due to backup provided by the plant of Buxbridge.

* Consolidating the production of different countries into a single could help in smooth running of a well managed and well designed plant as compared to manage many plants in different regions.

* The coast of adding a new plant was US$500000, which was less than the cost of expanding the existing plant.

* New plant could add more storage and large scale facilities that can reduce the reliance of outside suppliers.

* The operating cost of running a single plant was less than the cost of running separate plants.

* The new centralized plant could increase the quality of the Alden Products by using the modern equipments.

What is your evaluation of the Uniplant’s performance during the 1980s?

Uniplant’s performance remained good during the 1980s because:

* Plant never had a loss even in the period in which there was explosion in the prices of oil and petrochemical products and an increase in the hourly wage rate in Holland.

* Despite a 70% increase in the cost of living of the Holland the average per unit cost of the plant only increased at the rate of 50%.

* The average unit cost of the Uniplant’s in 1988 was not significantly different from the unit cost of Buxbridge despite the low wage rate in United Kingdom.

* Uniplant insulated itself against the inflation by purchasing the material from different countries less than 35% of its purchases at Uniplant....