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Date Submitted: 09/28/2012 05:00 PM

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Create a hypothetical global corporation and answer the five basic questions that deal with production:

We are going manufacture and assemble farm tractor, with parts that will be shipped in from other Countries and the basic machine will be tooled at the new plant that is being built in Prog, Germany. We will be concentrating on building the tractor at our plant in Prog and then dispersing them to other foreign countries by rail, truck, or ship.

The plans are to get the tractor business set up and then build other equipment to go along with the tractors.

We are in for the long haul and even if there is a change, we feel that it is important to keep the people that have been hired for the corporation to keep then working. There will always be a need for farm tractors and farm machinery.

There is nothing new about manufacturers outsourcing part or all of the manufacturing process, however, given the increasing tendency to outsource all or part of the manufacturing process, there are some twists and turns which companies should be aware of when sourcing from foreign countries.

This article appeared in "Industry Week" in February 2009.

Costs of Tooling, Duration of Agreement and Pricing.

There is usually a tension between the distributor and the vendor as to who bears the initial costs of product development. Product development requires collaboration on the design of the product and the cost of making dies and tools and other machinery to manufacture the part or product in question. The supplier does not wish to invest significant amounts in tooling without some guaranty of return on its investment.

We feel that a lot of the outsourcing will be needed because there are numerous parts that need to be set up and be tooled by outside companies, and we have a insurance that will help support the companies that we are using to build the parts that we need...