Assignment 2: Operations Decision

Topics: Variable cost, Costs, Total cost Pages: 3 (907 words) Published: June 10, 2013
Operating Decision
ECO 550

Briefly describe the details of the fictitious business that you created for this assignment.
Allentown Manufacturing Company is a family owned business that manufactures cardboard boxes. Currently, the company has a manpower rate of 100 workers that work 20 out of a month. The company has been able to last through some of the toughest economic times, but recently the AMC’s fixed cost is “high enough”, and their total costs are exceeding their total revenue. Assess the current environmental scan factors that are relevant to the decision making process. Determine the factors that will have the greatest impact on plant operations and management’s decision to continue or discontinue operations. Provide a rationale for your determination. Some environmental scan factors that are affecting the decision making process are social, economic and technological circumstances. When it comes to the social factors, the lack of properly trained and skilled laborers are affecting the amount of production being put out on a daily basis. The company needs to develop a better recruitment process and training program to employ the best and most profitable employees. In addition, the language barrier creates a problem for our managers. The majority of our workforce is Hispanic and speaks minimal English; this creates problems when trying to delegate job duties among the employees. The economic factors are that the country as a whole is trying to go green; therefore recycling old cardboard boxes is more environmentally friendly than using new ones. This causes a decrease in the amount of orders coming in, therefore affecting the amount being shipped out. The technological factors are the lack of computer skills by some of the labor force. If the machines that produce the product are not being run properly in order to produce the maximum output rate, then this will cause a decrease in profits. Management should focus the economic and social...
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