Question

In: Economics

Confidential Role Information for the CRAWLEY PLANT MANAGER Phillips and Crawley are two separate plants and...

Confidential Role Information for the CRAWLEY PLANT MANAGER Phillips and Crawley are two separate plants and profit centers owned by Universal Computer. You have been quite concerned about the quality problems on some of the modules your plant sends to the Phillips plant. Over the last several months considerable progress has been made and you intend to keep pushing on the matter and expect some further improvement, although it will probably not be as great as that realized before. Some poor quality items are bound to occur with a product as complicated as a module. Given the volume at which these are produced, 100% inspection is impossible and sampling, especially at the 95% level of acceptance, is an accepted practice, even though it means that some faulty items will get through. You feel that the position taken by the Phillips plant manager that your plant accept the costs of repairing all faulty parts is ridiculous. You have to bear the expense on repairing items from your outside vendors when faulty pieces are not returned to them, and you do not see why the same practice should not apply to within‐company vendors too. Of course, if shipments were refused because of poor quality they could be shipped back to your plant ‐‐ just as faulty shipments are returned to outside suppliers occasionally. You would like to avoid having the faulty shipments returned to you since you would also have to pick up transportation expenses. If you had to repair a rejected lot of modules it might be cheaper to send a repair person to the Phillips plant. You are particularly puzzled and troubled that twelve types of modules are found to be below the desired quality level when they arrive at the Phillips plant even though they were apparently at the desired level when they left your plant. It is a company policy that plants are responsible to see that products shipped meet stated quality levels, regardless of whether they go to an outside or a within‐company buyer. Overall, all modules shipped to the Phillips plant are above the 95% level, so you think that you are complying with company policy but you are nonetheless concerned about the twelve modules that at times do not measure up to the standard, first because you want to get the plant output to a high standard, and secondly because you fear that if this matter gets to higher management, they may revise the interpretation of how the 95% level of quality is to be applied, making it applicable to each individual type of product line rather than to the overall output of a plant. If you had to accept any of these expenses, you would like to charge part of them to the department in the plant that makes the faulty modules and part to the final inspection department, to give them feedback on their performance and to put pressure on both of them to improve. In addition, the Phillips plant manager has been urging that you absorb overtime costs that come from delayed production, caused by shortages of modules when a great number of them have to be rejected. You think Phillips is way out of line on this matter and would never accept any arrangement like that. Unfortunately, while this dispute has gone on, modules have been rejected at incoming inspection at the Phillips plant at a rate of about $15,000 a week. The plant manager at the Phillips plant is just letting them sit there while trying to get you to accept responsibility for them. Before long, this will come to the attention of the Vice President of Manufacturing, and when it does you feel that both you and the Phillips plant manager will be called on the carpet for not having solved this problem. The Phillips plant manager has set an appointment with you this afternoon at your plant, for what is said to be one last try to settle the matter.

issues, interest, goals, strategies and rational approach

Solutions

Expert Solution

There are two basic issues faced by the Crawley and Philips plants :-

i) manufacturing defects and quality issues - faced by Crawley

ii) delayed productions and shortages of modules - faced by Philips

Both Crawley and Philips management wants to improvise the adversities in the interest of their companies and to achieve the set goals. The major areas of strategy control through a rational approach are:-

i) to maintain the quality of the product by ensuring minimal or no defects

ii) if in case any item is defected it should be repaired on time by Crawley, whether by sending some repair person to Philips or by taking it back and getting repaired.

iii) to ensure that the modules are transported properly in its best condition and reach Philips plant as it left Crawley after being checked and packed.

iv) the over expenses of repair must be levied and extracted from the manufacturing and quality inspection department.

v) The overtime cost and rejection of modules caused by delayed production can be ignored by meeting the production time deadline or the turn around time (TAT).


Related Solutions

Discuss the role of plant tissue culture methods for generation of (a) somatic hybrid plants, and...
Discuss the role of plant tissue culture methods for generation of (a) somatic hybrid plants, and (b) mutant plants with enhanced resistance to bacterial diseases. Please explain as detail as possible. Thank you.
Exercise 2. Two plants A firm has two plants, both with increasing marginal costs. Plant 1...
Exercise 2. Two plants A firm has two plants, both with increasing marginal costs. Plant 1 is more efficient than plant 2. Specifically, the cost function in plant 1 is c1(y1)=2y12, while the cost function in plant 2 is c2(y2)=3y22. Output produced in plant 1, y1, is identical to output produced in plant 2, y2. For any overall output level Y=y1+y2the firm wants to minimize costs. What is the marginal cost in plant 1? Find ∂c1/∂y1. What is the marginal...
You’re the plant manager in one of ABC Company’s five plants. You’ve worked for the company...
You’re the plant manager in one of ABC Company’s five plants. You’ve worked for the company for 15 years, working your way up from the factory floor after the company sent you to college. Your boss just told you in complete confidence that the company will have to lay off 200 workers. Luckily, your job won’t be affected. But a rumor is circulating in the plant, and one of your workers (an old friend who now works for you) asks...
Steinwelt Piano manufactures uprights and consoles in two plants, Plant I and Plant II. The output...
Steinwelt Piano manufactures uprights and consoles in two plants, Plant I and Plant II. The output of Plant I is at most 300/month, whereas the output of Plant II is at most 250/month. These pianos are shipped to three warehouses that serve as distribution centers for the company. To fill current and projected orders, Warehouse A requires a minimum of 200 pianos/month, Warehouse B requires at least 150 pianos/month, and Warehouse C requires at least 200 pianos/month. The shipping cost...
1) A book manufacturing company has two different production plants, plant A and plant B. 40%...
1) A book manufacturing company has two different production plants, plant A and plant B. 40% of books come from plant A. Of the books that come from plant A 30% are defective and 70% work as intended. Of the books from plant B 10% are defective and 90% work as intended. On top of this 10% of the defective books from plant A explode. A) Draw a tree diagram of this data. B) What is the probability of randomly...
A manufacturer of automotive gaskets has two plants, A and B. Plant A manufactures 65 %...
A manufacturer of automotive gaskets has two plants, A and B. Plant A manufactures 65 % of the gaskets and plant B manufactures 35 %. Because of a batch of faulty material from a company supplying both plants, 3% of the gaskets are of sub-standard quality from plant A and 5% are sub-standard from plant B. Despite your internal quality control procedures, you still had a sub-standard gasket returned from one of your customers. What is the probability it came...
You are the manager of a wine company that produces output in two plants. The demand...
You are the manager of a wine company that produces output in two plants. The demand for your company's product is P = 78 − 15Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 3Q1 and MC2 = 2Q2. How much output should be produced in plant 1 in order to maximize profits? a. 1 b. 2 c. 3 d. 4
What is the role of the HIM (Health Information Manager) in a healthcare organization – when...
What is the role of the HIM (Health Information Manager) in a healthcare organization – when it comes to revenue and finances?
The shift to the information economy has changed the role of the manager in today’s organization.  ...
The shift to the information economy has changed the role of the manager in today’s organization.   Research has demonstrated that a majority of workers in this new knowledge economy are knowledge workers or workers whose work output is the result of thinking versus a physical process. Discuss what skills today’s managers need in the knowledge economy that weren’t required a decade ago?
Consider two 50 MW power generating plants. One plant is fueled by combustion of coal, the...
Consider two 50 MW power generating plants. One plant is fueled by combustion of coal, the other by solar energy. Using the concept of exergy, explain why the ecological impacts of the solar power process are lower than the coal fired process. Use words and diagrams in your answer
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT