Verified Document

Operations Decision Assume You Have Been Hired Essay

Operations Decision Assume you have been hired as a managing consultant by a company to offer some advice that will help it make a decision as to whether it should shut down completely or continue its operations. It currently uses 100 workers to produce 6,000 units of output per month (working 20 days / month). The daily wage (per worker) is $70, and the price of the firm's output is $32. The cost of other variable inputs is $2,000 per day. You are told that the firm's fixed cost is "high enough" so that the firm's total costs exceed its total revenue. The marginal cost of the last unit is $30.

Rough Financial Statement

Revenues

$ per Unit

Total

Expenses

Workers

Price Per Day

$70.00

Number of Days

Subtotal

$140,000.00

Variable Costs

$2,000.00

Subtotal

$40,000.00

Total

$180,000.00

Gross Revenue

$12,000.00

Business Overview

The company currently represents one of the last apparel manufactures that still manufactures all of its products in the United States. The company has been able to maintain its U.S. operations despite rising costs because the target market is in a niche that allows the company to charge a premium. All of the other manufactures in this industry have outsourced their entire manufacturing operation to foreign markets to take advantage of cheap labor and lower their operating costs....

Mexico has bene a popular destination for a bulk of the industry given its proximity to the United States. However, this company call, U.S. Custom apparel, has decided to continue production in the U.S. because it supports their market niche. Furthermore, the company has a built a loyal customer base that values the fact that the company uses domestic labor and it willing to pay a premium for these goods.
However, at the same time, the company's strategy is not profitable nor does it show any future potential. The current gross profits are roughly twelve thousand dollars before fixed costs are considered. Therefore, when fixed costs are added, it is reasonable to suspect that the company is operating at a substantial loss. While U.S. Custom Apparel can produce goods at roughly five dollars to twenty dollars per unit, many of the competitors can produce comparable products often with comparable quality for a fraction of the cost (Institute for Global Labour and Human Rights, 2005). Therefore, the time has come for the company to decide if its operating model is sustainable any longer given the competitive environment.

One of the emerging business trends that have helped companies keep their expenses down is that many are outsourcing a lot of administrative business functions. In the global market, small to medium sized enterprises (SMEs) can outsource entire business functions in order to keep their internal staff levels down. It is not only SMEs that have taken advantages of outsourcing opportunities in other countries such as India and…

Sources used in this document:
Works Cited

Goldberg, P. (2009, December). Intellectual Property Rights Protection in Developing Countries: . Retrieved from Yale University: http://www.econ.yale.edu/~pg87/Goldberg_Marshall.pdf

Institute for Global Labour and Human Rights. (2005, June 20). How Can Wal-Mart Sell a Denim Shirt for $11.67? Retrieved from Institute for Global Labour and Human Rights: http://www.globallabourrights.org/reports?id=0042

Lesonsky, R. (2012, May 2012). The Pros and Cons of IT Outsourcing: Globally, Nationally and Locally. Retrieved from Read Write: http://readwrite.com/2012/05/17/the-pros-and-cons-of-it-outsourcing-globally-nationally-and-locally

Lo, C. (2011). Global outsourcing or foreign direct investment: Why apple chose outsourcing for the iPod. Japan and the World Economy, 163-169.
PRWEB. (2012, January 13). Global Footwear Sales to Reach U.S.$195.6 Billion by 2015, According to a New Industry Report by Global Industry Analysts, Inc. Retrieved July 3, 2012, from http://www.prweb.com/releases/footwear_sports_leather/athletic_footwear/prweb9101683.htm
Cite this Document:
Copy Bibliography Citation

Related Documents

Operations Decision Assume Hired a Managing Consultant
Words: 1411 Length: 4 Document Type: Essay

Operations Decision" Assume hired a managing consultant a company offer advice make a decision shut completely continue operations. It 100 workers produce 6,000 units output month (working 20 days / month). Operations decisions Details of the business Miller Inc. is a manufacturer of a fast moving soap, Socas which is available as a bar of 250g, 500g or 1 kg. The company is named after Michelle Miller who is an industrial chemist

Operations Decision
Words: 841 Length: 3 Document Type: Marketing Plan

Operations Decision This business makes hand-crafted chairs in New Mexico. The chairs are made for a company that brands them and markets them through a variety of channels. Wood is either local or from Colorado, and the craftspeople have modest woodworking skills to construct the chairs. The environment is competitive for this product. Chairs are a fairly easy product to make. The more trade agreements the government signs, the more competition there

Operation Decision
Words: 744 Length: 3 Document Type: Research Paper

fictitious business that you created for this assignment. Light Up the Sky, Inc. is a company that manufactures luminescent kites. This company has been in business for the past 10 years and during this time has established itself as a high quality manufacturer of these kites. Even though this company appeals to a small fraction of the entire kite industry, they had been able to maintain a 20% profit margin.

Decisions by School Superintendents Improper Attitude and
Words: 7657 Length: 24 Document Type: Term Paper

Decisions by School Superintendents Improper Attitude and Unprofessional Conduct of Teachers To educate a person in mind and not in morals is to educate a menace to society - President Theodore Roosevelt. That teaching is at one and the same time an intellectual as well as a moral endeavor, is an idea that is well entrenched in the minds of men since centuries past. The sayings of great teachers of ancient times bear

Operations & Supply Chain Management
Words: 1907 Length: 7 Document Type: Research Proposal

4 (rezoning and building shopping center) = 0.7 times $4,000,000 + 0.3 times $5,000,000 = $4,300,000 The p (rezoning and building shopping center) is the best solution, with the expected return at 0.6 times $4,300,000 + 0.4 times $2,400,000= $3,540,000 This means that the expected net profit will be $540,000 Question 4 a) I am assuming that the greatest advantage of the work-in-process inventory is that the production is always associated and correlated with

Ethical Leadership and Decision Making
Words: 2009 Length: 7 Document Type: Thesis

Reflections The situation encountered at the DFR Insurance Corporation has a twofold moral: ethics are crucial for the success of the business operations, and, the employees are the core of organizational triumph. Also, as it is already generally accepted, organizations need to constantly change and adapt to the conditions of the micro and macroenvironments. In this order of ideas then, they should not implement change only when a major modification

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now