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Albatross Anchors Unit 3 Assignment

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Submitted By lacymay08
Words 1122
Pages 5
Unit three Written Assignment
Lacy Smith
MT435 Operations Management
Kaplan University
July 1, 2013 Introduction Albatross Anchor’s is a family owned business that started in 1976 that grew to employ one hundred and thirty employees. All departments of the company are in one building and the departments consist of an administrative office, manufacturing, shipping, receiving, raw materials storage, finished goods storage and the foundry. Through the years the standards of the department has decreased and Albatross needs to revamp their company to be up to those standards of the US and environmental.
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:
Cost of production is $8.00 per pound for mushroom/bell anchors and $11.00 per pound for snag hook anchors. The cost of production definition is the cost of making or acquiring goods and services that directly generates revenue for a firm. It consists of direct and indirect costs. (Cost of Production, 2013) b) Economies of Scale in material purchasing:
An economy of scale is the reduction in long-run average and marginal costs arising from an increase in size of an operating unit. (Economies of Scale, 2013) It can be external or internal; external will increase the productivity of the industry and will result in a reduction of costs (External Economies of Scale, 2013) and internal is related to the shift in average production costs for a business as it boosts its overall product output and the average cost per unit falls until maximum efficiency is attained. (Internal Economies of Scale, 2013) Albatross could save money if they bought items in bulk but since they make items as orders are received,...

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