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Mt435 Unit 3

In: Business and Management

Submitted By mammadeez
Words 1323
Pages 6
Unit three Written Assignment

Denise M Salazar

MT435 Operations Management

Kaplan University

November 29, 2012

Introduction

This case study delves into Albatross Anchor; a small family owned company that produces both fresh and saltwater anchors. This company has grown over the years from 4 employees to 130; but has not shown growth in the operational side. Some of the challenges they face are lack of space and disorganization within the administration of the front office. This coupled with old, outdated technology and safety issues have hindered them in creating a larger profit margin. These issues must be addressed if Albatross Anchors is to improve in their market segment.

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 of the two types of anchors they manufacture are as follows: A) Freshwater Mushroom/Bell Anchors: $8.00 per pound B) Saltwater Snag Hook Anchors: $11.00 per pound As Albatross Anchors price per unit are on scale with their competitors, concerns need to be address as to the issues of profit margin being under 35% on some of their products. Outdated technologies as well as inefficient manufacturing practices need to be revised and implemented to make the manufacturing process more efficient. b) Economies of Scale in material purchasing: Due to the size and scope of the plant space, as well limited area for storage of raw materials, Albatross Anchors will be hard pressed to meet capacity utilization. According to The Economist, “Economies of scale are factors that cause the average cost of producing something to fall as the volume of its output increases”, (The Economist, 2008). As...

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