Operations Management
Operations Management
11th Edition
ISBN: 9780132921145
Author: Jay Heizer
Publisher: PEARSON
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Chapter 2, Problem 12P

Rao Technologies, a California-based high-tech manufacturer, is considering outsourcing some of its electronics production. Four firms have responded to its request for bids, and CEO Mohan Rao has started to perform an analysis on the scores his OM team has entered in the table below·

Chapter 2, Problem 12P, Rao Technologies, a California-based high-tech manufacturer, is considering outsourcing some of its

Weights are on a scale from 1 through 30, and the outsourcing provider scores are on a scale of 1 through 5. The weight for the labor factor is shown as a w because Rao’s OM team cannot agree on a value for this weight. For what range of values of w, if any, is company C a recommended outsourcing provider, according to the factor-rating method?

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Rayyan manufacturing company is trying to decide whether to make-or-buy an accessory item for one of their products. It is projected that this item will sell for $14 each. If the item is outsourced, there is virtually no cost other than the $10 per unit that they would pay their supplier. Internally, they have a choice of making a process to produce the item which requires an investment of $300,000 for design and equipment, but results in a $9 per unit cost. Regardless of whether the item is outsourced or produced internally, there is a 60% chance that they will sell 250,000 units, and a 40% chance that they will sell 150,000 units.
Rao Technologies, a California-based high-techmanufacturer, is considering outsourcing some of its electron-ics production. Four firms have responded to its request forbids, and CEO Mohan Rao has started to perform an analy-sis on the scores his OM team has entered in the table below. Weights are on a scale from 1 through 30, and the outsourc-ing provider scores are on a scale of 1 through 5. The weightfor the labor factor is shown as a w because Rao’s OM teamcannot agree on a value for this weight. For what range ofvalues of w, if any, is company C a recommended outsourcingprovider, according to the factor-rating method?
ABC company plans to produce a new line of laptop computers. Management wants to decide either to purchase keyboard for the new computers from an outside supplier or to manufacture them in the factory. If they buy from the supplier each keyboard will cost 100$. However, if they set up the assembly process required within the company it will cost an initial investment of $100,000. After the set up company can produce each keyboard in the factory for $75. Calculate the break-even point. Comment which option is better below and above the break-even point.
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