Case Study

Topics: Variable cost, Costs, Fixed cost Pages: 4 (870 words) Published: May 1, 2013
Chad Malone
Unit 3 Case Study 

The case study presented deals with a small family owned business called Albatross Anchor. Albatross Anchor case study deals with operational challenges that are being confronted. Some of the problems that are being faced are due to operational inefficiencies such as shabby and disorganized administrative offices and antiquated, worn, and technology deprived plant. In order to achieve company profit these operational challenges must be dealt with accordingly  

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:
Cost or Production
$8 per pound for mushroom/bell anchors
$11 per pound on for snag hook anchor  
Labor: wages, benefits, workmen comp
Tools: proper equipment
Facilities: taxes, insurance, and the utilities

b) Economies of Scale:
The firm is not able to realize economies since they are not able to produce larger orders as easy. They are not able to meet capacity utilization within the plant due to operational inefficiencies. They can only produce small batches.

Correct ratio of workers
Workers abilities
Production of the workers to sales orders
c) Cost of Raw Materials Sitting Idle in the Warehouse:
The raw materials sit idle until they are ready to ship out which leads to large cost of holding raw material in inventory. 

Spoilage of the material
Security around the plant
Steel is it high quality
Extra cost to fix things 
d) Cost of Finished Goods Sitting Idle in the Warehouse:
They are able to ship out finished products effectively.
2. Speed of manufacturing process from order to finished product.  
The speed of manufacturing process from order to finish product is very challenging since each anchor requires its own unique equipment. Currently they...
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