Case Study 1
KU Consulting
KU Consulting has been asked to bid on a large consulting job with Albatross Anchor. In
order to win the contract for this consulting job a well written, logical, and highly
organized proposal must be written. It is your task/challenge to write the proposal for revamping Albatross Anchors Operations systems so that KU Consulting may win the
$50,000 contract.
Using the mandatory template (found in Doc Sharing) prepare your proposal by
answering (in detail) all of the questions posed below.
Your answers must demonstrate your
understanding of the concepts and principles
identified within the textbook, course information,
and activities, but also from independent academic
quality research to solve these challenges.
While it is acceptable to use the textbook as
foundational material you must conduct
independent research, as well, using the Kaplan
virtual library and the Internet to find information
that supports your findings and conclusions. A
minimum of four academic resources, in
addition to the textbook, is required for each
section of the proposal.
Please note: Quotations should make up no
more than 10% of your proposal.
Requirements for successful completion of each section of the proposal include:
Prepared using the mandatory template for each section of the proposal (the
templates for each section can be found in Doc Sharing of this virtual classroom).
Failure to use the mandatory template will result in an automatic reduction of one
grade level.
Proposal Cover Page
APA style reference page.
The body of the paper must be 4 full pages long (this does not include the cover or
reference pages).
Body of the paper must be double-spaced (this includes spacing between
paragraphs and before/after headings).
One inch margins on all four sides of the page.
Times New Roman 12-font only.
Indent the first sentence of each new paragraph inch (this is already set in MS
Word as the first Tab setting)
Grammatically and mechanically sound.
Introductory and concluding paragraph(s).
A minimum of four academic quality research sources in addition to the textbook.
Citations, within the body of the paper, identifying source materials, and in APA
format are required along with corresponding reference page listings.
The following documents are in Doc Sharing.
.pdf
MT435 Case Study 1 Template.doc (Template is required)
Please note*
1. Do not use Wikipedia, wikis, Answers.com, Ask.com, online dictionaries, or online
encyclopedias for this project. As a senior level student you are responsible for
independent research and for veracity of source.
2. A search engine is not a source but a tool used to find a resource. For information
on APA referencing of the information on APA
formatting contained within the Kaplan Writing Center for more information or you
may use the Kaplan Guide to Successful Writing that is located in the Doc Sharing
area of this virtual classroom.
Albatross Anchor Case Study 1 (Note: This is not a real company)
Introduction
Albatross Anchor is a small family owned business that began in 1976 with four family
members. Albatross anchor has grown exponentially and now employs 130 people. This
one location/facility is situated on 12 acres located in a rural suburb of Smalltown, USA
(Please note* the building and facilities for Albatross Anchor are landlocked).
The plant* and the administrative offices are located in the same building.
(*Note: The plant includes: manufacturing, the shipping department, the receiving department, raw
materials storage, finished product storage, and the foundry).
The administrative offices are in the front of the building and the plant is located directly
behind the administrative offices (see diagram). The administrative offices have issues
because they are somewhat shabby, disorganized, and run inefficiently.
The plant is antiquated, worn, dirty, and technology-deprived and it no longer meets all
U.S. safety and environmental standards.
The owners of this small business have added on various processes as needs arose;
within the limited space of the plant. When Albatross Anchor first opened its doors their
expertise was in the manufacturing of bell/mushroom anchors (using a foundry process).
In 1989, in response to international competition, the owners of Albatross Anchor made
the decision to expand the product line to include fabricated snag hook anchors.
Customers
Albatross Anchor is a manufacturing factory that sells only at the wholesale level.
Albatross Anchors sales their products in two ways:
(01) Distributors that act as the middleman. The distributor accepts bulk delivery
of anchors at their large distribution centers. At the distribution center the bulk
shipment of anchors is broken up into smaller batches and shipped to individual
retail locations.
(02) OEM customers that purchase anchors in large batches to be used as a
component in the manufacture of boats.
Albatross Anchor does not sell retail. They are strictly a wholesale organization.
Products
The bell anchor is manufactured primarily through a foundry process in which ore is
transformed into a liquid state and then poured into molds as part of the production
process. The bell anchor is used primarily by freshwater marine craft.
The snag hook anchor is fabricated through the bending and welding of iron rods and flat
iron into a hook design. The hook design is best when used in saltwater. This hook design
snags bedrock and seaweed which holds the marine craft at anchor. The snag hook
anchor is used primarily for small to medium sized saltwater marine craft.
Each anchor is produced in multiple sizes to accommodate the type of watercraft, the
size of the watercraft and the place where the anchor will be used (saltwater or
freshwater).
Manufacturing
Each anchor type requires its own unique equipment and manufacturing process. Yet,
both manufacturing areas share the same shipping area, receiving area, warehouse area,
and administration offices.
The manufacturing area of the plant has had to change to accommodate the manufacture
of the two separate types of anchors. As each anchor requires its own manufacturing
challenges the manufacturing line must be completely changed over each time the anchor
type is changed. The time to switch over from one manufacturing process/operation to
the other manufacturing process/operation is 36 hours.
The plant space is at a premium and warehousing space for raw materials and finished
product is limited and located at the far south end of the building.
Plant antiquation and safety issues result in small batch production only. As a result of
this limitation, lead time for exceptionally large bulk orders is 3 to 4 weeks.
Costs
Current manufacturing costs are $8.00 per pound for mushroom/bell anchors and $11.00
per pound for snag hook anchors. Albatross Anchor charges the same per unit as their
competitors. However, the profit margin can sometimes be as much as 35% less (on
some of the anchors) because of operations inefficiencies.
Shipping challenges
Outgoing freight
Product size, bulk, and weight and maximum load limits require that the anchors be
shipped by large truck, rail, or . Domestic orders are usually
shipped by large truck. International orders are shipped by rail and ultimately by large
ocean-going freighters. These are the only two methods of product shipment.
Incoming freight
Receipt of raw materials is by rail. Prior to the sale of anchors into the international
market all shipments of finished product went out completely by truck and therefore all
shipping activities were limited to the east side of the building.
Now, because of the limitation of shipping product into the international marketplace, all
product shipments for international delivery go out of the receiving dock for the initial leg
of shipment by rail. Prior to expansion into the international marketplace shipping had
been limited to the shipping department and receiving was limited to the receiving area.
However, with this change in international shipping the receiving area must now do
double duty shipping of international orders as well as receipt of all incoming raw
materials.
Please view the below representation of the current building/facility set up.
Case Study 1
Question 1
Based on the information presented in the scenario/case study discuss Albatross Anchors
competitiveness in relation to:
(a) Cost (i.e., consider cost of production, economies of scale in material
purchasing, cost of raw materials, and finished goods sitting idle in the
warehouse).
(b) Speed of manufacturing process from order to finished product.
(c) Flexibility in filling order(s)
(d) Technology
(e) Capacity and facilities. The is inefficient. Please tell what
about the current floor plan makes it inefficient and give recommendations for
improvement. What type of factory would be best for mixed model manufacturing?
(f) Service to customers (what types of services would an anchor company provide
to marine wholesalers?)
Be sure to address all items in the list (above) and provide support for your
conclusions.
Question 2
There are many ways that mushroom/bell anchors may be manufactured. Albatross
Anchor is considering two new manufacturing processes (Process A and Process B) to
reduce costs. From the available information below determine which process has the
lowest breakeven point (this validates the process is more cost effective) and report your
analysis and supporting conclusion.
For each process the following fixed costs and variable costs are identified below:
Anchor and Process Process A Process B
Sale price per anchor $45.00 $45.00
Total Fixed cost $650,000.00 $950,000.00
Variable cost per anchor $36.00 $29.99
Based on the above information identify:
(a) The total fixed costs per anchor for Process A and Process B
(b) The total number of anchors needed to break even for Process A and for
Process B.
Enter your answers into the chart below.
Anchor and Process Process A Process B
(a) Fixed costs per anchor
(b) The total number of anchors to attain
break-even point for Process A and Process B
(c) From your calculations identify whether you would recommend Process A or
Process B for adoption (select only one). Please make sure to explain how you
arrived at your conclusion.
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