Clearhear

Assumption of organizational values

Clear Hear is a company that specializes in the manufacturing of cellular phones. They are currently running two production lines at its factory, producing two different models - the Alpha and the Beta models. Each model has independent variable and fixed cost, as well as varied profits. Clear Hear’s value statement prioritizes providing products in a timely manner that exceed the expectations of the customers while maintaining admirable and ethical business practices including keeping their employees working and treating business partners as they want to be treated. It is integral to the company that all business practices are aligned with these values, thus any proposed solutions to a problem must keep the integrity of the company intact.

Assessment of current problem

A major chain, Big Box, has placed an order with Kendra Sherman, who serves as a business development specialist at Clear Hear. The order calls for 100,000 Alpha model phones which are to be delivered within 90 days. Big Box is offering Clear Hear $15 per unit. Big Box has asserted that neither the cost nor date is negotiable. Currently Clear Hear is capable of producing 70,000 Alpha phones that are an excess capacity over the next three months, and then possibly switching production of the remaining 30,000 units from the Beta model to Alpha to meet the order of Big Box. Agreeing to fulfill the Big Box order with current production costs and methods would not provide any profit for the company as the $17 per unit total cost of producing the Alpha model would result in a $2 per unit loss. Clear Hear has received an offer to subcontract their production to another company called OEM, who states they can, not only, meet production requirements for quality and quantity, but also supply them within the 90 days allotted by Big Box. OEM had offered to sell their phones for $14 per unit, which would result in a $1 per unit profit based on the $15 per unit...