Answered: The company reports that demand is…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Transcribed Image Text:Case: The Tao of Timbuk2* The local manufacturing is focused on the custom messenger bag. For these bags, orders are taken over the Internet. The customers are given many configuration, size, color, pocket, and strap options. The bag is tailored to the exact specifications of the customer on the Tim- buk2 assembly line in San Francisco and sent via over- night delivery directly to the customer. Recently, Timbuk2 has begun making some of its new products in China, which is a concern to some of its long-standing customers. The company argues that it has designed its new products to provide the best pos- sible features, quality, and value at reasonable prices and stresses that these new products are still designed in San Francisco. Timbuk2 argues that the new bags are much more complex to build and require substantially more labor and a variety of very expensive machines to pro- duce. It argues that the San Francisco factory labor cost alone would make the retail price absurdly high. After researching a dozen factories in China, Timbuk2 found one that it thinks is up to the task of producing these new bags. Much as in San Francisco, the China factory employs a team of hardworking craftspeople who earn good wages. Timbuk2 visits the China factory every four to eight weeks to ensure superior quality standards and working conditions are met. On the Timbuk2 website, the company argues it has the same hardworking group of bag fanatics designing and making great bags, and supporting the local com- munity and the increasingly competitive global market. "Timbuk2 is more than a bag. It's more than a brand. Timbuk2 is a bond. To its owner, a Timbuk2 bag is a dependable, everyday companion. We see fierce, emo- tional attachments form between Timbuk2 customers and their bags all the time. A well-worn Timbuk2 bag has a certain patina-the stains and scars of everyday urban adventures. Many Timbuk2 bags are worn daily for a decade or more, accompanying the owner through all sorts of defining life events. True to our legend of 'indestructibility,' it's not uncommon for a Timbuk2 bag to outlive jobs, personal relationships, even pets. This is the Tao of Timbuk2." What makes Timbuk2 so unique? Visit its website at www.timbuk2.com and see for yourself. Each bag is custom designed by the customer on its Website. After the customer selects the basic bag configuration and size, colors for each of the various panels are presented; various lines, logos, pockets, and straps can be selected so that the bag is tailored to the exact specifications of the customer. A quick click of the mouse and the bag is delivered directly to the customer in only two days. How does it do this? This San Francisco-based company is known for producing high-quality custom and classic messenger bags according to the customer's personally customized order, using a team of approximately 25 hardworking cut- ters and sewers. Over the years, it has fine-tuned its plant's production line to make it as efficient as possible, while producing the highest-quality messenger bags available.

The company reports that demand is still strong for the
custom messenger bags made in San Francisco and that
the new laptop bags sourced from China are receiving
rave reviews. The additional business is allowing it to
hire more people in all departments at the San Francisco
headquarters, creating even more jobs locally.
2. Compare the assembly line in China to that in
San Francisco along the following dimensions:
(1) volume or rate of production, (2) required
skill of the workers, (3) level of automation, and
(4) amount of raw materials and finished goods
inventory.
3. Draw two diagrams, one depicting the supply
chain for those products sourced in China and the
other depicting the bags produced in San Fran-
cisco. Show all the major steps, including raw
material, manufacturing, finished goods, distribu-
tion inventory, and transportation. Other than man-
ufacturing cost, what other costs should Timbuk2
consider when making the sourcing decision?
Questions
1. Consider the two categories of products that
Timbuk2 makes and sells. For the custom mes-
senger bag, what are the key competitive dimen-
sions that are driving sales? Is its competitive
priorities different for the new laptop bags
sourced in China?

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