Operations Management

operations management

Unit three Written Assignment

Angie Reynolds

MT435 Operations Management

Kaplan University

July 28, 2012

Introduction

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:

Due to the presence of operational inefficiencies, Albatross Anchor is unable to reduce their costs as a result of which they have a lower profit margin. Therefore, they have a cost of production disadvantage as compared to their competitors.

b) Economies of Scale in material purchasing:

They can enjoy Economies of Scale when it comes to purchasing materials. Buying in bulk means they can get discounts from the suppliers on their purchase.

c) Cost of Raw Materials Sitting Idle in the Warehouse:

The increased amount of goods stored in the warehouse means that Albatross Anchor also needs to incur higher amounts of holding costs of storing the large amounts of inventory. Holding costs refers to the cost of carrying an inventory and may include costs such as, depreciation, deterioration, spoilage, taxes and insurance to name a few.

d) Cost of Finished Goods Sitting Idle in the Warehouse:

Both finished goods and raw materials share the same space, thereby putting Albatross at a disadvantage thus leading to the 35% less in profit.

2. Speed of manufacturing process from order to finished product.

Due to limited number of products the manufacturing processes are effectively used. The number of complexities is low; Albatross produces what they can produce at the speed demanded by the marketplace. ADVANTAGE

3. Flexibility in filling order(s)

Manufacturing process is not flexible to account for a wide variety of products and is not modular to allow production processes to change output rapidly. For example each type...