MT435 Operations Management Based on the information presented in the (answer attached) - 14399

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MT435 Operations Management Based on the information presented in the (answer attached)

Question One

Based on the information presented in the scenario/case study discuss Albatross Anchor’s competitiveness in relation to (please address all items in the below list and provide support for your conclusions):

1.  Cost

            a)  Cost or Production:


            b)  Economies of Scale:


            c)  Cost of Raw Materials Sitting Idle in the Warehouse:


            d) Cost of Finished Goods Sitting Idle in the Warehouse:


 2. Speed of manufacturing process from order to finished product.


3. Flexibility in filling order(s)


4. Technology


5. Capacity and facilities


6. Service to customers (what types of services would an anchor company provide to marine wholesalers?

Question Two

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.  Analysis of the information below will help determine which process has the lowest breakeven point (this validates the process is more cost effective).


For each process the following fixed costs and variable costs are identified below:



Anchor and Process

Process A

Process B

Sale price per anchor

$ 42.00

$ 42.00

Total Fixed cost

$ 650,000.00


Variable cost per anchor

$ 36.00

$ 29.99



Based on the information in the table above complete the table 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) Based on your calculations which Process (A or B) that you would recommend for adoption (you can select only one).  Please make sure to explain how you arrived at your conclusion.





Solution Description


Albatross Anchor Case Study
Albatross Anchor is a small family owned business that began in 1976 with four family members. Albatross anchor has grown exponentially and now employs one hundred and thirty people. Their one location/facility is situated on twelve acres of land located in a rural suburb of Small town, USA. The manufacturing plant and the main office are located in the same building with the manufacturing. The administrative offices are in the front of the building and the manufacturing area is in the back of the building. The manufacturing part of the building is antiquated, worn, dirty, technology deprived and it no longer meets all US safety and environmental standards and the administrative offices are shabby and inefficient.

The owners of this small business have added on various processes as

needed within the limited space provided within the plant. When Albatross Anchor first opened its doors their expertise laid in the manufacture of the bell/mushroom anchor (using a foundry process). Because of international competition in 1989 the owners of Albatross Anchor made the decision to expand their product line to

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