RM Company is looking to change its numerically controlled machines into a flexible manufacturing system. The transition will handle about 30% of RM Company’s work. There will be additional costs for startup process. The new system is likely to reduce the inventory, floor space, production time and number of labors required. The annual labor savings is a huge sum on the implementation of the new process. The company’s return on investment states that it should be at least over 15% for a new process to be implemented and the payback period should be less than 5 years. To determine: The case of a conservative manager to maintain the status quo until there are more obvious returns.

Question

Want to see the full answer?

Answer 1

Question

Chapter 7, Problem 2CS

Summary Introduction

Case summary:

RM Company is looking to change its numerically controlled machines into a flexible manufacturing system. The transition will handle about 30% of RM Company’s work. There will be additional costs for startup process. The new system is likely to reduce the inventory, floor space, production time and number of labors required.

The annual labor savings is a huge sum on the implementation of the new process. The company’s return on investment states that it should be at least over 15% for a new process to be implemented and the payback period should be less than 5 years.

To determine: The case of a conservative manager to maintain the status quo until there are more obvious returns.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Rochester Manufacturing’s Process Decision - Process Strategy Rochester Manufacturing Corporation (RMC) is considering moving some of its production from traditional numerically controlled machines to a flexible manufacturing system (FMS). Its computer numerical control machines have been operating in a high-variety, low-volume manner. Machine utilization, as near as it can determine, is hovering around 10%. The machine tool sales people and a consulting firm want to put the machines together in an FMS. They believe that a $3 million expenditure on machinery and the transfer machines will handle about 30% of RMC’s work. There will, of course, be transition and start up costs in addition to this. The firm has not yet entered all its parts into a comprehensive group technology system, but believes that the 30% is a good estimate of products suitable for the FMS. This 30% should fit very nicely into a “family.” A reduction, because of higher utilization, should take place in the number…

Refer to Problem 7.1. If a contract for the secondand third years is pending, what a re the implications fo r processselection?

Robot Manufacturing Optimization FAY Technologies is deciding whether it should begin production of a new toy robot. It has manufactured children’s toys before but nothing as advanced as its latest robot so historical data is at a minimum. The company believes that they can secure the materials for manufacture for between $65-85 per unit and labor costs would be between $15-25 per unit. Management’s expectations are that materials will cost $70 per unit and labor $25 per unit and that 800 units will be sold monthly. Should FAY decide to manufacture the robots in-house, maintenance of the factory machine would cost $15,000 per month. However, management has found that another alternative is for the company to outsource the labor for a flat rate of $35 per unit. The company expects to sell between 750-1000 units per month initially at a price of $149. Provide recommendations for FAE technologies that will maximize profit. Also include base, worst, and best case…