Unit three Written Assignment
MT435 Operations Management
February 17, 2014
Albatross Anchors is a family owned business that began in 1976 with four family members and has grown over the years now employing 130 people. The company’s facility is located on 12 acres of land and is comprised of only one building. This building includes the administrative offices, shipping and receiving, foundry, manufacturing and large machine area, and raw and finished products areas. Albatross Anchors manufactures two different types of anchors; the mushroom/bell anchor and the snag hook anchor. Because of the different manufacturing ...view middle of the document...
Ultimately this is going to bring their margin profit down which results in Albatross Anchors being disadvantaged compared to all their other competitors.
b) Economies of Scale in material purchasing:
Economies of scale occur when it costs less per unit to produce or operate at high levels of output (Russell & Taylor, 2014). Albatross Anchors is not competitive in this area. To be competitive in this area would require the company to expand and increase their volume which would result in the per unit output dropping. With the current challenges they face in their manufacturing processes Albatross Anchors cannot be competitive in this area.
c) Cost of Raw Materials Sitting Idle in the Warehouse:
The plant space is at a premium and warehousing space for raw materials and finished product is limited. The plant is antiquated as well which contributes to small batch production only. Because manufacturing of the anchors is done in small batches, raw materials have to sit idle in the warehouse. Raw materials sitting idle in the warehouse results in Albatross Anchors not being competitive in this area.
d) Cost of Finished Goods Sitting Idle in the Warehouse:
Because the plant space is limited for both raw materials and finished goods, Albatross Anchors is not competitive in this area either. There are only two methods of shipping. Domestic orders are usually shipped by truck but international orders are shipped by rail then ocean-going freighters. This requires coordination and scheduling between all carriers which could result in finished goods sitting in the warehouse longer.
2. Speed of manufacturing process from order to finished product.
Since Albatross Anchors only manufactures two types of anchors, the mushroom/bell and snap hook anchors, currently they are keeping up with demand. Where this limits the company though is in expanding their business and making it more profitable. The fact that they have two completely different manufacturing processes limits their availability to produce anchors in mass production.
3. Flexibility in filling order(s)
There isn’t flexibility in filling orders. This is another area where Albatross Anchors is disadvantaged compared to their competition. Since the two different types of anchors require different manufacturing processes, the manufacturing line has to be completely changed out every time they produce either anchor.
The plant is antiquated and technology-deprived. This includes both the manufacturing processes and the administrative offices. The manufacturing processes no longer meet the US safety and environmental standards. This can be detrimental to the environment as well. The administrative offices are disorganized and run inefficiently.
5. Capacity and facilities
The current floor plan of the plant is very inefficient. First, the raw materials and finished products areas are on the south end of the building. ...