Case Study 3
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Industrial Engineering
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Dec 6, 2023
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Running head: Case Study 3: Bedford Mining
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Case Study 3: Bedford Mining
Andrew Alward
Framingham State University
Bedford Mining
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Section 1: Introduction
This case study is about the examination and comparison of two products from the time
of initial distribution to a few years after those products are released. The purpose of this analysis
is to determine whether product B should proceed forward, into production and distribution. By
examining the processes of distributing, producing, and marketing for each product, the company
should be able determine whether adding product B to the product line is a good move, in terms
of future profitability and longevity for said company.
After analyzing the factors and the merits of the two products, it will be decided if
product B will be chosen for introduction into the market. Further analysis will be conducted to
improve the product’s performance overall. This will be accomplished by identifying the positive
aspects of the product and determining why/how these aspects can be exploited to better the
product and company.
At the same time, determining the negative aspects will assist in
mitigating and reducing the severity of the damage that those negative aspects can impose.
Section 2: A Summary of the Main Issues of Concern That Require Attention
Upon consideration of
the activity data, an abundance of convincing points come to the
forefront, favoring the presentation of product B[ CITATION Foo94 \l 1033 ]. In the initial steps,
product B would not appear to be the obvious favorite, owing to the initial unprofitability in the
first year of introduction, but after the started of the promotion and early distribution of product
B has been accomplished, the income starts to then come to realization[ CITATION Foo94 \l
1033 ]. Observing the rudimentary expenses for product B, it can be observed that it is cheaper
than those same costs had been for product A, both blending and crushing expenses are the equal
for both goods, and thickening charges for product A were at $49.00 while with product B, they
would be at $0.00[ CITATION Foo94 \l 1033 ]. The differentiators are simply to get the goods
extracted out of the ground; this would not play a role when the delivery system is proceeding.
The single difference you see as regards the cost between the two products is the dyeing
and sizing expenditures, where product A stands at $76.00 per ton while product B is at $100.00
per ton[ CITATION Foo94 \l 1033 ]. When examining product B it can be noticed that it is not
requiring the sizing view of the goods, consequently eliminating the $100.00 per ton
expense[ CITATION TEa19 \l 1033 ]. The expenses for packing product B will be drastically
lesser when compared to product A, as the consumers are estimated to be purchasing product B
in a high volume, which will remove most of the packaging costs[ CITATION Cla23 \l 1033 ]
[ CITATION Foo94 \l 1033 ]. Buying in bulk also places product B in a favorable light, with
regards to a inexpensive per ton deliverance expense; it will be sold principally to existing
consumers, where they will use the previously established storage containers and be paying a
uniform rate[ CITATION And23 \l 1033 ]. Lastly, the commission on the products will be greater
for product B in the end[ CITATION Foo94 \l 1033 ]. The main matter of concern would be the
preliminary release of the goods, owing to the customer being unfamiliar with the new product;
however, with promotion and a marketing strategy put in to practice, there will undoubtably be
gains for product B, as opposed to that of product A.
Another added benefit of bulk purchasing is the economy of scale, whereby the more that
is produced and sold, the more the costs are reduced, effectively making the product more
affordable and thus, more profitable[ CITATION And23 \l 1033 ]. The other added benefit to
bulk selling, is the reduced costs in packaging, which could help the environment with less
pollution; this in turn, could be utilized as a marketing advantage, improving the company’s
image[ CITATION Cla23 \l 1033 ].
Bedford Mining
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Section 3: A Detailed Case Discussion
After having analyzed both product A and B, and having production costs at various
stages and costs to package and ship said products be similar, it becomes clearer for the company
to decide on whether or not to go forward with product B. Looking at the possible longevity of
product B and how it will potentially perform in the first year and future years, it becomes
evident that both products have positive and negative aspects. With that being said, product B
stands out as being the better product.
Inspecting the activity analysis, there is an overabundance of terrific factors that are
favorable to the presentation of product B. The introduction of product B cannot be auspicious,
due to the instant unprofitability in the first years; however, once it is introduced and the
marketing and advertising has had time to take effect, as well as the preliminary circulation of
product B is accomplished, the revenues will come to realization[ CITATION Foo94 \l 1033 ].
Looking at the basic mining expenses for product B, it had been observed that they were cheaper
overall than product A’s mining costs; both the blending and crushing expenses are to stay the
same, while thickening costs for product B will be less then half of the same costs for product
A[ CITATION Foo94 \l 1033 ]. These differences are just to get the product out of the earth, this
does not even take into consideration the calculations of the costs for when the distribution
process is underway.
The other price differentiation that will be observed between product A versus product B
is the dyeing and sizing costs. Product A has a cost for dyeing and sizing of $76.00 per ton, while
product B has a total combined cost of $100.00 per ton[ CITATION Foo94 \l 1033 ]. However,
when analyzing product B, it was determined
that because of its chemical composition, it would
not require the sizing; additionally, with customers expected to be purchasing product B in bulk,
thus reducing packaging costs, the combined effects of these reductions would effectively
eliminate the $100.00 per ton packaging process costs[ CITATION Cla23 \l 1033 ][ CITATION
TEa19 \l 1033 ]. Purchasing in large amounts will also present a favorable to product B with a
reduce the per ton transport expenses and will be sold to chiefly current consumers, whereby
they will utilize the old containers that had been already used and be charged a the going flat
rate[ CITATION And23 \l 1033 ]. Lastly, as per the case study, the salespeople’s sales
commission on the goods will be more for product B in the long run. The main problem will be
the primary distribution of the new product, due to the customer not being acquainted with the
new good, but with a scheduled advertising as well as marketing strategy in place, there will
undoubtedly be increases with product B versus product A[ CITATION TEa19 \l 1033 ].
Section 4: Conclusion
After having read through all of the Bedford mining case study, it is clear what choice is
to be made. This clear choice has to be introduced product B as fast as possible. With the
philosophy of spending money to make more money, since that is the primary route to make
progress in business, the only sensible choice would be to innovate and to put forth the new good
to the customer. The refinery is showing potential from the start with product A, there is great
customer feedback, and the company has a successful Just-in-Time systems. There remains little
doubt that the business will be a success story with the beginning of product B.
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Bedford Mining
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References
Foote, P. (1994).
Bedford Mining.
Loo, A. (2023).
Economies of Scale.
Retrieved from CFI:
https://corporatefinanceinstitute.com/resources/economics/economies-of-scale/
Sand, C. K. (2023, 03 01).
Less Packaging, More Sustainability.
Retrieved from Food
Technology Magazine: https://www.ift.org/news-and-publications/food-technology-
magazine/issues/2023/march/columns/packaging-less-packaging-more-sustainability
Team, C. (2019, 09 23).
Product Costs.
Retrieved from CFI:
https://corporatefinanceinstitute.com/resources/accounting/product-costs/