ANSWER THE FOLLOWINGQUESTIONS ASKED AFTER READING THE CASE:Teloxy Engineering has received a one-time contract to design and build 10,000units of a new product. During the proposal process, management felt that thenew product could be designed and manufactured at a low cost. One of theingredients necessary to build the product was a small component that could bepurchased for $60 in the marketplace, including quantity discounts. Accordingly, management budgeted $650,000 for the purchasing and handling of 10,000components plus scrap. During the design stage, your engineering team informs you that the finaldesign will require a somewhat higher-grade component that sells for $72 withquantity discounts. The new price is substantially higher than you had budgetedfor. This will create a cost overrun. You meet with your manufacturing team to see if it can manufacture the componentat a cheaper price than buying it from the outside. Your manufacturingteam informs you that it can produce a maximum of 10,000 units, just enough to fulfil your contract. The setup cost will be $100,000 and the raw material cost is$40 per component. Since Teloxy has never manufactured this product before, manufacturing expects the following defects:All defective parts must be removed and repaired at a cost of $120 per part.QUESTIONS1. Using expected value, is it economically better to make or buy the component?2. Strategically thinking, why should the management opt for the most economicalchoice?3. Assume that you are the Project Engineer of this project, your labour force did not meet the targetaccomplishment of the project. What will you do? Will you fire your current labour force and replacethem with new personnel? Why or why not? fulfil your contract. The setup cost will be $100,000 and the raw material cost is$40 per component. Since Teloxy has never manufactured this product before,manufacturing expects the following defects:% defective10203040probability of occurrence (%)1020302515All defective parts must be removed and repaired at a cost of $120 per part.QUESTIONS1. Using expected value, is it economically better to make or buy the component?2. Strategically thinking, why should the management opt for the most economicalchoice?3. Assume that you are the Project Engineer of this project, your labour force did not meet the targetaccomplishment of the project. What will you do? Will you fire your current labour force and replacethem with new personnel? Why or why not? Teloxy Engineering has received a one-time contract to design and build 10,000units of a new product. During the proposal process, management felt that thenew product could be designed and manufactured at a low cost. One of theingredients necessary to build the product was a small component that could bepurchased for $60 in the marketplace, including quantity discounts. Accordingly,management budgeted $650,000 for the purchasing and handling of 10,000components plus scrap.During the design stage, your engineering team informs you that the finaldesign will require a somewhat higher-grade component that sells for $72 withquantity discounts. The new price is substantially higher than you had budgetedfor. This will create a cost overrun.You meet with your manufacturing team to see if it can manufacture the componentat a cheaper price than buying it from the outside. Your manufacturingteam informs you that it can produce a maximum of 10,000 units, just enough to

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Structural Analysis

6th Edition

ISBN:9781337630931

Author:KASSIMALI, Aslam.

Publisher:KASSIMALI, Aslam.

Chapter2: Loads On Structures

Section: Chapter Questions

Problem 1P

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ANSWER THE FOLLOWING QUESTIONS ASKED AFTER READING THE CASE: Teloxy Engineering has received a one-time contract to design and build 10,000 units of a new product. During the proposal process, management felt that the new product could be designed and manufactured at a low cost. One of the ingredients necessary to build the product was a small component that could be purchased for $60 in the marketplace, including quantity discounts. Accordingly, management budgeted $650,000 for the purchasing and handling of 10,000 components plus scrap. During the design stage, your engineering team informs you that the final design will require a somewhat higher-grade component that sells for $72 with quantity discounts. The new price is substantially higher than you had budgeted for. This will create a cost overrun. You meet with your manufacturing team to see if it can manufacture the component at a cheaper price than buying it from the outside. Your manufacturing team informs you that it can produce a maximum of 10,000 units, just enough to fulfil your contract. The setup cost will be $100,000 and the raw material cost is $40 per component. Since Teloxy has never manufactured this product before, manufacturing expects the following defects: All defective parts must be removed and repaired at a cost of $120 per part. QUESTIONS 1. Using expected value, is it economically better to make or buy the component? 2. Strategically thinking, why should the management opt for the most economical choice? 3. Assume that you are the Project Engineer of this project, your labour force did not meet the target accomplishment of the project. What will you do? Will you fire your current labour force and replace them with new personnel? Why or why not?

fulfil your contract. The setup cost will be $100,000 and the raw material cost is
$40 per component. Since Teloxy has never manufactured this product before,
manufacturing expects the following defects:
% defective
10
20
30
40
probability of occurrence (%)
10
20
30
25
15
All defective parts must be removed and repaired at a cost of $120 per part.
QUESTIONS
1. Using expected value, is it economically better to make or buy the component?
2. Strategically thinking, why should the management opt for the most economical
choice?
3. Assume that you are the Project Engineer of this project, your labour force did not meet the target
accomplishment of the project. What will you do? Will you fire your current labour force and replace
them with new personnel? Why or why not?

Teloxy Engineering has received a one-time contract to design and build 10,000
units of a new product. During the proposal process, management felt that the
new product could be designed and manufactured at a low cost. One of the
ingredients necessary to build the product was a small component that could be
purchased for $60 in the marketplace, including quantity discounts. Accordingly,
management budgeted $650,000 for the purchasing and handling of 10,000
components plus scrap.
During the design stage, your engineering team informs you that the final
design will require a somewhat higher-grade component that sells for $72 with
quantity discounts. The new price is substantially higher than you had budgeted
for. This will create a cost overrun.
You meet with your manufacturing team to see if it can manufacture the component
at a cheaper price than buying it from the outside. Your manufacturing
team informs you that it can produce a maximum of 10,000 units, just enough to

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