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Operations Management: Processes and Supply Chains (11th Edition)
11th Edition
ISBN: 9780133872132
Author: Lee J. Krajewski, Manoj K. Malhotra, Larry P. Ritzman
Publisher: PEARSON
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Textbook Question
Chapter 12, Problem 9P
A large global automobile manufacturer is considering outsourcing the manufacturing of a solenoid used in the transmission of its SIJVs. The company estimates that annual fixed costs of manufacturing the part in-house, which include equipment, maintenance, and management, amounts to $6 million. The variable costs of labor and material are $5.00 per unit. The company has an offer from a major subcontractor to produce the part for $8.00 per unit. However, the subcontractor wants the company to share in the costs of the equipment. The automobile company estimates that the total cost would be $4 million, which also includes management oversight for the new supply contact.
- How many solenoids would the automobile company need per year to make the in-house option least costly?
- What other factors, besides costs, should the automobile company consider before revising its supply chain for SUVs?
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Students have asked these similar questions
Following are some of the information on demand and costs of a mobile phone manufacturer:
Monthly Sales for previous year were 10,000 Mobile Phones. Overall Market has grown at 15% from the previous year. The company uses a third-party storage solution for keeping its inventory. The charges are Rs. 100/unit. For procuring the raw material company relies on a contractor which provides them a one stop solution and charges Rs. 3000 per order. The actual cost of the raw material is approximately 7000/unit.
Using the above given information answer the following questions?
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Chapter 12 Solutions
Operations Management: Processes and Supply Chains (11th Edition)
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