1. Which criteria should be used in selecting orders?
* While selecting the orders, there should be a proper coordination between Marketing and operations. If operation is estimating on the quote and the delivery date then Marketing should not over-write it without consulting operations. The people in operations can also be aware of the market conditions and the corporate goals. This can make less difference in the quote. * The job must fit with Ti-Tech’s high quality image and capabilities * The Company should have experience with similar products * Clear specification and job scopes
* Contribution before S, G&A should be 20% of the selling price * Simple design and reliable cost estimates
* Progress payments on labor and material (as applied).
* Market area potential
* Job allowing adequate delivery time.
* Acquiring or developing a standard product line.
* Opportunity to add a new capability to Ti-Tech’s operation. * Able to meet Contingencies.
2. What are the major characteristics of each order relative to the criteria?
* Market area potential – Stone parker.
* Opportunity to add a new capability to Ti-Tech’s operation – Northern Paper * The Company should have experience with similar products – Hendrick Construction * Able to meet contingencies - Chemco
3. What is the best order?
Let us first see which not the best is:
* Stone Parker is not the best because it requires unusual fabrication with which Ti-Tech is inexperienced. Also, Stone Parker is making progress payments only on raw materials and not labor. The stone parker had a very high material cost. And unusually low labor cost. This may create problem because there may be labor uncertainties.The Subcontracting is the minimum and cannot go down. Though it has a contribution of 20% , still the labor cost uncertainty and high cost of material makes them unattractive. * Chemco is not the best because it is not a long term...
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