Jgt2 Task 3 Essay

3952 Words16 Pages
A. Recommend which method (for example: using equipment that has been reconditioned, acquiring new equipment in the Shanghai plant, or the possibility of outsourcing) Shuzworld should use for the new sneaker manufacturing that will be while using the appropriate decision analysis tool. The Samba Sneaker is a new shoe that Shuzworld has decided to manufacture. The trademark of the sneaker is that it is a bright colored show that will be marketed towards teenagers and pre-teens. Shuzworld needs to make a decision on which choice would be more economical: Refurbishing or reconditioning the equipment that is already being used, possibly buying new equipment, or possibly outsourcing the products to China. The cost of reconditioning is fixed at $50,000. On top of that there is a variable cost that is $1000 per every 1,000 shoes that are being produced. If brand new equipment is bought the fixed cost sits at $200,000 with an added variable cost which is $500 for each 1,000 units. If the choice of outsourcing is chosen then there are not any fixed costs. Variable costs are a little higher at $3,000 for every 1,000 sneakers. The information that has been provided has been reviewed and the following recommendation is given. With the information given the best choice is reconditioning. The data that will follow this shows all three options. Here is an insert from POM for Windows (An operations management tool) which assists in figuring out the best outcomes for the operations of business. When the data was placed into POM the following was the results: The two different cost types that need to be looked at are both the fixed costs and the variable costs. The data that was provided shows that the bond the cost of the business and the revenues coming in are in fact linear. The cost volume and breakeven analysis tool requires the costs that are variable to be

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