Albatross Anchor Case Study 1

Introduction

Competitiveness pertains to the ability and performance of a firm to sell and supply goods and services in a given market, in relation to the ability and performance of other firms in the same market. As a representative and consultant for KU Consulting firm, below is my assessment of Albatross Anchor’s operating system and how it stands against its competitors.

Question 1

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 or Production: The best operating level for a facility is the percent of capacity utilization that minimizes average unit cost. With Albatross Anchor the cost of production includes $8.00/pound for the mushroom/bell anchors, $11.00/pound for the snag hook anchors, utilities and lease on the facility premises, payroll, insurance and marketing of their anchors. Due to operating inefficiencies Albatross Anchor’s is losing money. Some of these inefficiencies is the 36 hours of downtime to change the manufacturing process/operation, the lack of flow with the layout of the facility and the

b) Economies of Scale: This is when it costs less per unit to produce and operate at higher levels of output. At Albatross Anchor they need to increase the volume of production in order to get the cost per unit down. I would suggest picking whichever anchor has the higher demand and consider only manufacturing that anchor. Again the downtime is severely hurting the cost and production of your company.

c) Cost of Raw Materials Sitting Idle in the Warehouse: If the company decides to take my suggestion to only manufacture one of the anchors then that will free up some real estate in the facility and monies tied to the materials of the anchor you drop. For instance, the bell anchor uses ore where the snag hook anchor uses iron rods and flat iron. Since they are only...