Albatross Anchor

Unit three Written Assignment

MT435 Operations Management

Kaplan University

March 21, 2014

Introduction

Albatross Anchor is a small manufacturing company that has been considering revamping their operations to remain competitive in the current marketplace. The company founded nearly 40 years ago is experiencing difficulties in maintaining a competitive advantage over their competitors. In this proposal I will attempt to capture their main concerns along with recommendations on how to best proceed to with restructuring the company’s operations so they can remain competitive in the anchor manufacturing industry.

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:

Operations inefficiencies are causing a loss of profit due to selling product the same rate as competitors. The antiquation of the company’s facilities has resulted in safety and regulatory compliance issues which likely add to costs associated with fines levied by the regulatory agencies and the cost associated with bringing those issues into compliance.

b) Economies of Scale in material purchasing:

“a larger producer is often able to obtain reduced prices from suppliers for its inputs, in part because the unit costs to the suppliers are lower for larger volumes” [ (The Linux Information Project, 2006) ]. Limited storage space for raw materials does not allow the company to purchase large quantities of raw materials. This inability is likely resulting in a higher manufacturing cost per unit due to not being able to purchase large enough quantities of raw material to receive a discounted price from their suppliers. According to prices on the website discountsteel.com if the company were able to increase their storage capabilities for raw materials they could realize potential savings of...