Mt 435 Albatross Anchor Unit 3 Assignment

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Albatross Anchor: An Operations Management Study Lin McClain MT435 Operations Management Kaplan University September 11, 2013 Introduction Albatross Anchor, a small, family owned business in operation since 1976, has grown rapidly since its introduction. There is only a single building for the entire corporation though it sits on a 12 ache landlocked plot. The single building houses both the manufacturing area and the administration offices for the plant. The plant produces two different kinds of anchors including a snag hook anchor which requires folding metal to make a hook shape and a mushroom/bell anchor which requires a mold. There are many issues with the plant including that it is older, dirty, worn, no longer meets all US safety standards, and is not efficient. The company only sells wholesale with no retail outlet and it takes 36 hours to switch from one anchor to another each time they need to switch from one to the other. Due to these and other issues, Albatross Anchor may make up to 35% less than their competitors. 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 should look at lowering production costs in order to realize greater profit margins. By increasing production, Albatross Anchor will be able to decrease fixed costs. They would be able to spread the costs across more units which would decrease the price per unit they need to pay. Production costs decrease with increases in production levels. This will help to recapture profit margins lost to inefficiency and make them better competitors in their chosen market, (Russell & Taylor, 2011). b) Economies of Scale in material purchasing: Albatross
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