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Albatross Anchor

In: Business and Management

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Unit three Written Assignment

Carrie Flood

MT435 Operations Management

Kaplan University

October 6, 2012

Introduction

Question One
Based on the information presented in the scenario/case study discuss Albatross Anchor’s competitiveness in relation to (please address all items in the below list and provide support for your conclusions):
1. Cost a) Cost of Production: Albatross charges about the same price as the competitors do. However the inefficiency of their operations can sometimes reduce their profit margin by 35% which leads me to believe that it could be better for them to outsource the product (Russell & Taylor, 2011). If they were to outsource it would reduce their overhead which includes labor and materials and they wouldn’t have to incur those costs anymore therefore making them more profitable (Russell & Taylor, 2011). b) Economies of Scale in material purchasing: Albatross is able to spread their fixed costs over the number of units they produce because they produce them in large quantities and do not sell individual orders or to retail stores (Wise Geek, 2012). c) Cost of Raw Materials Sitting Idle in the Warehouse: Albatross receives all their raw material by rail. In order to keep the cost of raw materials down, Albatross has to plan the utilization of these products so that they do not sit very long (Voortman, 2004). d) Cost of Finished Goods Sitting Idle in the Warehouse: It is important for Albatross to get out product as soon as it’s finished. If they don’t keep the product flowing they will just have it tied up in idle stock (Voortman, 2004).
2. Speed of manufacturing process from order to finished product. They clearly do not have a very fast cycle time for their products which reduces this companies efficiency (Davis & Davis, 2012). When they have to change the equipment around to produce a different anchor it…...

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