Operations Management
Operations Management
11th Edition
ISBN: 9780132921145
Author: Jay Heizer
Publisher: PEARSON
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Chapter E, Problem 2CS
Summary Introduction

Case summary:

IB Company asked two other companies to bid on additional 80 units for a computer product. The companies submitted the figures and the cost breakdown. One of the companies SM indicated displeasure over the inflation possibility in material costs.

They had another concern regarding the large requirement of subcontracting and overtime that will be needed to complete the requested deliver by IB Company. They called upon further meetings to discuss the cost estimations as they have seriously underestimated the cost requirements.

To compare: The proposed learning rate of SM Company with other industries.

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Question 4 b) Company ABC wishes to evaluate whether to produce a component internally or purchase from a vendor. The firm has the following options: Internal Production Process 1 Process 2 Purchase from Vendor Vendor 1 Vendor 2 Vendor 3 Variable cost of $17 per unit; annual fixed cost of $200,000 Variable cost of $14 per unit; annual fixed cost of $240,000 Offers a price of $20 per unit for any volume up to 30,000 units Offers a price of $22 per unit for 1,000 units or less, and $18 per unit for large quantities Offers a price of $21 per unit for the first 1,000 units and $19 per unit for additional units If the annual demand is 10,000 units, which alternative would be best from a cost standpoint? For 20,000 units, which alternative would be best?
QUESTION #1 Mrs. Johnson, the owner of a small manufacturing business has patented a new device for kitchen appliance. Before trying to commercialize the device and add it to her existing product line, the she wants reasonable assurance of success. Variable costs are estimated at $8 per unit produced and sold. Fixed costs are about $60,000 per year. a. Forecasted sales for the first year are 15,000 units if the price is reduced to $20. With this pricing strategy, what would be the product's total contribution to profits in the first year? b. If the selling price is set at $30, how many units must be produced and sold to break even? Use both algebraic and graphic approaches
Q6. Total Quality Management (TQM) covers all the requirements of an Integrative Management concept including in the manufacturing organization. Discuss your answer on the Input (supplier relationship management), Process (process management), and Output (customer relationship management) perspectives of TQM implementation.
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