Riordan Manufacturing Case Study
Riordan Manufacturing
Riordan Manufacturing is a global plastics manufacturer and industry leader in the field of plastic injection molding with locations in Georgia, Michigan, California, and their most current expansion in 2000 to Hangzhou, China. The company manufactures plastic bottles, fans in all sizes, medical devices, and custom plastic parts. The market for plastic bottles, fans, and custom plastic parts is affected by economic conditions (University of Phoenix, 2010). Understanding the economic impact on Riordan's customers is crucial in determining the future direction of the company. The China plant is a make to stock operation that uses a forecasting method to determine future demand. The Department of Defense is a major customer …show more content…
To determine the sustainable rate for output, the concept of best operating level for which the process was designed and the volume of output at which the average unit cost is minimized (Chase et al. 2006, p. 430). The most common measure for determining how close a firm is to their best operating level is to determine their capacity utilization rate. Capacity used is the rate of output achieved and the best operating level is the capacity for which the process was designed. Therefore, capacity utilization equals the capacity used divided by the best operating level. For example, if Riordan manufacturers 83 fans per week and the best operating level is 120 fans per week they are only working at a 69.2% utilization …show more content…
This usually creates a more efficient process that is able to employ resources more fully (Chase et al., 2006, p. 432). Whereas diseconomies of scale would exist if the plant becomes too large and the demand required for keeping up with the facility required discounting the price. When a plant gains economy of scale, it produces more. As plants produce more, they gain experience in the best production methods and reduce the costs of production. Every time a plants cumulative production doubles, the production costs decline (Chase et al., 2006, p. 432). Using capacity flexibility allows for the rapid increase or decrease in production levels or the ability to shift production capacity from one service to another. This requires flexible workers with multiple skills and the ability to switch tasks easily. Riordan employees all self-directed teams in which each team member is trained in multiple areas providing for this
Riordan Manufacturing is a global plastics manufacturer and industry leader in the field of plastic injection molding with locations in Georgia, Michigan, California, and their most current expansion in 2000 to Hangzhou, China. The company manufactures plastic bottles, fans in all sizes, medical devices, and custom plastic parts. The market for plastic bottles, fans, and custom plastic parts is affected by economic conditions (University of Phoenix, 2010). Understanding the economic impact on Riordan's customers is crucial in determining the future direction of the company. The China plant is a make to stock operation that uses a forecasting method to determine future demand. The Department of Defense is a major customer …show more content…
To determine the sustainable rate for output, the concept of best operating level for which the process was designed and the volume of output at which the average unit cost is minimized (Chase et al. 2006, p. 430). The most common measure for determining how close a firm is to their best operating level is to determine their capacity utilization rate. Capacity used is the rate of output achieved and the best operating level is the capacity for which the process was designed. Therefore, capacity utilization equals the capacity used divided by the best operating level. For example, if Riordan manufacturers 83 fans per week and the best operating level is 120 fans per week they are only working at a 69.2% utilization …show more content…
This usually creates a more efficient process that is able to employ resources more fully (Chase et al., 2006, p. 432). Whereas diseconomies of scale would exist if the plant becomes too large and the demand required for keeping up with the facility required discounting the price. When a plant gains economy of scale, it produces more. As plants produce more, they gain experience in the best production methods and reduce the costs of production. Every time a plants cumulative production doubles, the production costs decline (Chase et al., 2006, p. 432). Using capacity flexibility allows for the rapid increase or decrease in production levels or the ability to shift production capacity from one service to another. This requires flexible workers with multiple skills and the ability to switch tasks easily. Riordan employees all self-directed teams in which each team member is trained in multiple areas providing for this