DBS is also expecting the demand for its top-of-the range devices to increase further from the next year. Given the increase in annual requirement, the production manager is contemplating to start manufacturing the special components in-house to save costs rather than sourcing them from outside. Given the current purchase price of $9000 per unit, what will the average annual requirement need to be in order to justify making the components in-house if the variable cost of making is $6750 per unit and an upfront fixed cost of $55,000,000 is needed to procure the necessary plant and equipment? However, in the event that the expected increase in demand does not materialize and the demand is actually forecast to drop to 20,000 units next year, then what will be the maximum price per unit that DBS would be willing to pay to the supplier in order to continue buying from them? Going forward, if it is found to be a better decision to make the components in-house, DBS will then need to select an optimal location point to set up its manufacturing facility. Given the following location information and expected material movements from several transportation depots to the DBS’ intended manufacturing facility, find and plot the best location using centre-of-gravity method: Transportation depotsxYExpected material movements (no. of units)11615220002513150003101154004658000512611500618810000 Explain to the DBS operations manager some of the potential consequences of not understanding or considering non-quantifiable factors like local culture and practices when taking location decisions.Note:-Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.

To make the best production and location selections for its component manufacturing, DBS must…

Answered: Explain to the DBS operations manager…

Marketing

20th Edition

ISBN:9780357033791

Author:Pride, William M

Publisher:Pride, William M

Chapter19: Pricing Concepts

Section: Chapter Questions

Problem 6DRQ

See similar textbooks

Related questions

Concept explainers

Question

DBS is also expecting the demand for its top-of-the range devices to increase further from the next year. Given the increase in annual requirement, the production manager is contemplating to start manufacturing the special components in-house to save costs rather than sourcing them from outside.

Given the current purchase price of $9000 per unit, what will the average annual requirement need to be in order to justify making the components in-house if the variable cost of making is $6750 per unit and an upfront fixed cost of $55,000,000 is needed to procure the necessary plant and equipment? However, in the event that the expected increase in demand does not materialize and the demand is actually forecast to drop to 20,000 units next year, then what will be the maximum price per unit that DBS would be willing to pay to the supplier in order to continue buying from them?

Going forward, if it is found to be a better decision to make the components in-house, DBS will then need to select an optimal location point to set up its manufacturing facility. Given the following location information and expected material movements from several transportation depots to the DBS’ intended manufacturing facility, find and plot the best location using centre-of-gravity method:

Transportation depots	x	Y	Expected material movements (no. of units)
1	16	15	22000
2	5	13	15000
3	10	11	5400
4	6	5	8000
5	12	6	11500
6	18	8	10000

Explain to the DBS operations manager some of the potential consequences of not understanding or considering non-quantifiable factors like local culture and practices when taking location decisions.

Note:-

Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.

Expert Solution

Step by step

Solved in 6 steps with 4 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, operations-management and related others by exploring similar questions and additional content below.