Science Technology Company

709 Words3 Pages
Company Background :

Science Technology Company was a leading manufacturer of computer-controlled automated test equipment (ATE) that was used to monitor and manage quality over the life cycle of electronic products. With 31% market share, the company was the dominant firm in the design and manufacture of testers and test software for printed circuit boards. Its second business was its semiconductor test operation, which manufactured complex systems that cost in excess of $1 million and were used to test state-of-the-art very large scale integrated (VLSI) circuits. Other Products included a system to test electronic products in the field; systems used to test a products mechanical and structural integrity under stress and computer aided
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However because of the unpredictability of the past sales for 1978 to 1984, the ability to accurately project sales in the next 5 years will be low. Mr. Finson’s could either go directly to the sales and find out more accurately the seasonal demand not just the yearly sales of STC Company Products to further improve the accuracy of its sales projections.

As discussed last week about high risk of inventories, I could say the same with STC Company Inventory. Since accuracy of the sales projected for the 5 years are questionable they have a high risk in incurring over inventory thus leading to higher costs.
Even though that inventories were lowered in the projected 5 year forecast, what they can do to manage inventory is to do a just in time. By lowering inventory they would be able to further reduce the costs.

2. What impact would a resurgence of inflation, fueled by massive budget deficits, have on STC?

I am not sure if Mr. Finson included the inflation rate in his 5 year forecast but if he didn’t there would be a big impact on its financial statements. As we can see in the financial statements, a lot of fixed expenses are put into product cost and when inflation hits it will increase product costs and therefore lower the profitability of the company.

We can assume that one of the major components of the product cost is labor cost. And I suggest that the company do
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