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Leeds Inc

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Submitted By nsmoloney
Words 1979
Pages 8
Case Report:
Saw Blades at Leeds
Team II

Raj Pandit Tiffany Rongey

Jacob Tramontin Julian Vu
Executive Summary

This case examines the use of relevant and irrelevant costs to determine whether Leeds should continue production of Carbide blades, and whether or not to introduce composite blades. From our analysis, we have developed seven possible scenarios for the company, and have determined that our last scenario would most effectively utilize the remaining carbide inventory, while progressively entering the composite blade market.
Background

Leedsworks, Imperial Optronics PLC is the worldwide leader in the dry-cut lens processing equipment. They produce carbide blades made from a special steel alloy that can only be used for these blades. Barry Sullivan, the Leedsworks Division Executive, is now faced with a crucial financial decision due to a new competitor’s composite blade that has a higher quality, a longer lifespan, and developed from a cheaper material than their own carbide blade. There has always existed competition from European, American, and Asian firms; but, the composite blade is the newest technology for the industry that caught Leeds unprepared. Several of the company’s divisions will be affected by the decision on how to transfer over to the new blade. The demand is immediate, though the product will take at least six months to reach the market.
Barry Sullivan must closely consider the irrelevant and relevant costs that are involved in his decision to switch from carbide blades to composite blades.
Assumptions

Leedsworks can produce and sell 10,000 carbide blades per week based on the fact that the company averages 10,000 in sales weekly. Currently, there are 400,000 finished units of carbide blades in inventory; plus, another 300,000 additional units of carbide blades can be made from the

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