Albatross Case Study 1

Case Study #1 Written Assignment

Tanya Huff

MT435 Operations Management

Kaplan University

December 1, 2015

Introduction

Albatross Anchor has been in business since 1976. They are manufacturer of bell/mushroom anchors. They are only deal with wholesale; there is no retail service at all. Their building consists of their administrative offices, foundry, shipping and receiving, raw materials and finished materials storage, and manufacturing. Their building is not up to standards and is very old. In this case study, I will discuss as how to improve Albatross Anchor competitiveness and see if there is a new process to help bring down the costs.

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: Since Albatross Anchor keeps all departments in one building; this keeps the fixed cost down. The cost of manufacturing for the mushroom/bell anchors are $8.00 per pound and $11.00 per pound for the snag hook anchors. The charge the same per unit as their competitors due but since all departments are housed under one building, there are operations inefficiencies. This can bring down their profit margins. This would mean that Albatross Anchor has a cost disadvantage compared to competitors.

b) Economies of Scale: “Reduction in cost per unit resulting from increased production, realized through operational efficiencies. Economies of scale can be accomplished because as production increases, the cost of producing each additional unit falls” (WebFinance, 2015)  Since Albatross Anchor does production in small batches, there is really no way to realize the economies of scale. However, it could be realized in terms of material purchased but then it would just sit in the warehouse as finished goods inventory which would be another cost disadvantage.

c) Cost of Raw...