Case Study #1 KU Consulting Report
MT435 Operations Management
March 22, 2015
Case Study #1 Albatross Anchor
As a representative for KU Consulting, I would like to take this opportunity to address some of the issues with Albatross Anchor. Starting in 1976 as a small family owned business, Albatross is now a one hundred thirty employee operation. They manufacture bell and hook anchors and sell them wholesale in bulk. Located in Smalltown, USA, the company is facing many challenges in respect to building space, technology, and US safety and environmental standards, as well as production costs (Albatross Anchor).
a) Cost of Production: The cost of manufacturing the bell anchor is $8.00 per…show more content… All employees should be exposed to the same entrance to incorporate and familiarity between management and employee to create a welcome, work friendly environment (Russell & Taylor, 2013).
Service to customers (what types of services would an anchor company provide to marine wholesalers?
Albatross services their customers in two ways. First they sell their products at wholesale to distributors for shipping to retail locations and secondly OEM can buy the products in bulk to use in the manufacturing of boats.
Albatross Anchor is considering two new manufacturing processes (Process A and Process B) to reduce costs. Analysis of the information below will help determine which process has the lowest break-even point (this validates the process is more cost effective).
For each process the following fixed costs and variable costs are identified below:
Anchor and Process
Sale price per anchor
Total Fixed cost
Variable cost per anchor
Based on the information in the table above complete the chart below:
Anchor and Process
(a) Fixed costs per anchor
(b) The total number of anchors to attain break–even point for Process A and Process B 72,223
After doing my calculations I would recommend Process B for adoption because it requires fewer units to produce. We must first know our total fixed and variable costs, and the