Eco550-Assignment 2

Operations Decision

Jennifer Harris

Dr. Faux

Economics 550

August 9, 2013

I have been hired as a managing consultant for Temple’s incorporated. The company has hired me to help them make a hard decision as to whether they should shut down the manufacturing of high-end curling irons or continue the operation. Temple’s Incorporated has recently had a slight downturn in profitability and needs help assessing the current environment factors that are relevant to the decision making process as well as determine which ones will have the greatest impact on plant operations. The financial performance of the company will be a key area to help provide information on the short term and long term financial outlook for the company. I will try to find areas where the company can improve profitability and offer more value to its stakeholders. As a managing consultant, I will also need to let the company know at what point it might have to discontinue operations and if that happens how management ought to react when confronted with this type of circumstance.

Temple’s Inc. is a manufacturer based out of Norfolk, Virginia. Temple’s has been in business for 25 years and prides itself in the quality product that has evolved and changed over the years. This company manufactures high quality curling irons and distributes them through stores such as Sally’s Beauty Supply, Wal-mart, and Target. The company currently employs 100 people; about 10% are of Mexican ethnicity. The company produces 6,000 curling irons per month and sells them for $32.00 each. Currently, the manufacturing occurs 20 days per month. The wage for each worker is $70 per day. Temple’s has variable costs of $2,000 per day.

The environmental scan factors that we need to look at for Temple’s Inc. are societal and industry factors. The societal environment includes the forces that do not directly impact the short-term activities of the business but can affect the long-term activities. These forces...