The Four Flexibility Improvement Options

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Paper Case Qs 1) The four flexibility improvement options presented to Kiefner vary considerably in their cost and their potential effects on strategy and profitability for the company. The first option is one of the more expensive, but would also lead to some of the most substantive changes in the actual operations of Machine #4. At the same time, despite the fact that the specialization abilities of the machine will be significantly enhanced, marketing estimates that only a seven-percent premium could be charged, and only on about thirty percent of the machine's output the expected level of use for specialized runs under this plan. Switching to a one-week changeover cycle, which s the second option for the machine, is much cheaper and would have a higher yield than the first option, with a five-percent premium on all outputs of the machine if it were operated on this "just-in-time" basis. Even if the changeover time could not be reduced, this would be preferable than an expensive change to the machine that only affected thirty percent of output. It might be undesirable form a labor standpoint, however, and this is a major strategic consideration for the company given the current atmosphere. Cost and profitability enhancements should be weighed against the potentially costly labor issues that might ensue, while at the same time it must be remembered that a return to competitiveness is necessary in order to retain jobs. The third option is again expensive the most

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