Albatross Anchor

Topics: Costs, Variable cost, Fixed cost Pages: 4 (1890 words) Published: May 31, 2011
MT435 Operations Management
Unit Three
11/25/10

Introduction

Albatross Anchor is a small family owned business located in Smallville, MA. Albatross Anchor is located on 12 acres of land. They started out with four employees in 1976 and grow over the years to over 100. The company manufactures two types of anchors in different sizes. The types are the mushroom/bell anchor and the snap hook anchor. Albatross Anchor has many manufacturing problems which are the cause of the company not doing as well as it should be. The company is antiquated, worn and does not meet government guidelines. Albatross can be a company of the future with the application of much need upgrades and expansions.

Question one
A. Albatross Anchor‘s competitiveness in relations to cost below their competitors. They are 30% lower than their competitors. The cause of this is all the operation inefficiencies. They need to correct all of their problems in order to get in line with the competitors. The cost to manufacture is the same as the competitors $12.00 per/lb. for mushroom/bell anchors and $6.00 per /lb. for snag hook anchors. But, with the high price of shipping raw materials in finished goods not shipping out, and the cost of raw material, these are just some of the problems causing the company to lose money. The cost of the manufacturing process is hurting Albatross. The down time in between set up of the different anchors is a downfall of the company. They are paying workers to be there to wait for work to begin. The cost of raw material is high, since the company smaller than most. They will not get a better price as a large company would who manufactures more product. Cost efficient companies keep its capital, labor, and operating costs lower than its competitors. Then they must also provide a good price to its customers. Albatross Anchor should take on the method of Six Sigma This will help to achieve a level of...

References: (1998-2010 ). Retrieved from Balanced Scorecard Institute : http://www.balancedscorecard.org/BSCResources/AbouttheBalancedScorecard/tabid/55/Default.aspx
(2010). Retrieved from The benchmarking Exchange: http://www.benchnet.com/wib.htm
III, R. S. (2007). Operations Management: Creating Value along the Supply Chain, 6th Edition. John Wiley & Sons.
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