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Albatross Anchor's

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Submitted By shaedyn6
Words 789
Pages 4
MT435 Operations Management

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 of Production: Albatross Anchor’s fixed costs are down due to the fact that they house all departments in one location. The cost of manufacturing is $8.00 per pound for mushrooms and bell anchors and $11.00 per pound for snag hook anchors. Although, the advantage of housing all departments in one location is that their fixed cost is down the disadvantage is greater because they are operating inefficiently. In the long run this brings down their profit margin giving them a disadvantage when compared to competitors. b) Economies of Scale in material purchasing: Economies of Scale focuses on the company/plant getting larger and volume increasing, making the average cost per unit of output to drop. Albatross Anchor’s is not able to realize the economies of scale because they produce small batch sizes c) Cost of Raw Materials Sitting Idle in the Warehouse: Because raw materials just sit there until they are ready to be shipped out the cost is high. The company’s material purchasing department is able to get economies of scale but I assume this is what leads to the large idle inventory sitting in the warehouse. d) Cost of Finished Goods Sitting Idle in the Warehouse: Finished products also just sit in the warehouse until they are ready to be shipped out. The company is increasing their cost of holding both raw material inventory and finished goods inventory.
2. Speed of manufacturing process from order to finished product.
The advantage is that because the company has a limited number of products their manufacturing processes are effectively being used. They are producing

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