Clear Hear Scenarion
- Submitted by: BONDERONG
- Views: 1077
- Category: Politics: Economics
- Date Submitted: 05/16/2010 01:24 PM
- Pages: 5
- Report this Essay
Clear Hear Scenario
Big Box, a major service provider put an order of a 100,000 cell phones through Clear Hear’s business development specialist, Kendra Sherman. The order is a big opportunity boost for Clear Hear, not only in terms of profit, but gaining a wider market. It is also a bit of a challenge for Lisa Norman, production manager of Clear Hear, who will see to it that the company’s missions are upheld namely, keeping employees working, to provide customers with products on time delivery with the highest quality possible, and treat business partners as we want to be treated. Upon reviewing Clear Hear’s last month’s productivity report below, Lisa had to draw up several scenarios on how best to approach the Big Box order.
Unit Profitability Report
Alpha model Beta model
Price per unit 20 30
Variable cost per unit 8 12
Fixed overhead 9 10
Profits 3 8
Note. All unit prices are in dollars.
Lisa came up with three different recommendations to choose from, considering timeliness of delivery, quality of the products delivered, profitability and avoiding disruption of Clear Hear’s factory capacity and normal production schedules. Additionally, she knows of a competitor, Original Equipment Manufacturer (OEM), which has an extensive experience manufacturing cell phones for other brands and has won several quality awards for its manufacturing process. Their cell phone prototype has the same quality as Clear Hear’s Alpha model, and the fact that they can produce 100,000 units at a short notice, with a lower per unit price at $14 versus Clear Hear’s Alpha model at $20, OEM is an integral part of Lisa’s strategy to deliver the Big Box order in a timely and orderly fashion.
First option is to accept the order and manufacture 70,000 of the 100,000 cell phones utilizing the facility’s excess capacity, and outsource the remaining 30,000 from OEM. Analyzing the mechanics of this option, however, will result in a loss. As per the Unit Profitability Report...
Big Box, a major service provider put an order of a 100,000 cell phones through Clear Hear’s business development specialist, Kendra Sherman. The order is a big opportunity boost for Clear Hear, not only in terms of profit, but gaining a wider market. It is also a bit of a challenge for Lisa Norman, production manager of Clear Hear, who will see to it that the company’s missions are upheld namely, keeping employees working, to provide customers with products on time delivery with the highest quality possible, and treat business partners as we want to be treated. Upon reviewing Clear Hear’s last month’s productivity report below, Lisa had to draw up several scenarios on how best to approach the Big Box order.
Unit Profitability Report
Alpha model Beta model
Price per unit 20 30
Variable cost per unit 8 12
Fixed overhead 9 10
Profits 3 8
Note. All unit prices are in dollars.
Lisa came up with three different recommendations to choose from, considering timeliness of delivery, quality of the products delivered, profitability and avoiding disruption of Clear Hear’s factory capacity and normal production schedules. Additionally, she knows of a competitor, Original Equipment Manufacturer (OEM), which has an extensive experience manufacturing cell phones for other brands and has won several quality awards for its manufacturing process. Their cell phone prototype has the same quality as Clear Hear’s Alpha model, and the fact that they can produce 100,000 units at a short notice, with a lower per unit price at $14 versus Clear Hear’s Alpha model at $20, OEM is an integral part of Lisa’s strategy to deliver the Big Box order in a timely and orderly fashion.
First option is to accept the order and manufacture 70,000 of the 100,000 cell phones utilizing the facility’s excess capacity, and outsource the remaining 30,000 from OEM. Analyzing the mechanics of this option, however, will result in a loss. As per the Unit Profitability Report...