Case Analysis of Natureview Farm

Topics: Variable cost, Costs, Cost Pages: 3 (517 words) Published: September 11, 2011
AIC Netbooks: Optimizing Product Assembly

Diyora Hitesh V
Regd No. PA1110

AIC Systems is a producer of printed circuit boards, focusing on motherboards and graphics cards for the personal computer industry. The company is involved in Original design manufacturer and so the company took an active role in innovating and designing each new generation of components. The firm decides to diversify its portfolio to include consumer electronics with a particular focus on mobile technology. The new netbook market provides an opportunity for AIC Systems to design and manufacture a branded product in the mobile electronics industry. The production manager has created an assembly line for producing the new netbooks.

Now to meet the demand employees are working for 10 to 12 hours which is not sustainable for long time. The Chief Strategy Officer is expecting the demand of Netbook over 130,000 units in next one or two months. The problem faced by company is to meet the demand of Netbooks by improving the assembly method and by managing production activity. And also problem faced by company is of Labour efficiency Variance.  

For increasing production of Netbook to cop up demand two options are available: First option: Increasing Shift.
Production will increase and also time of one shift is reduce to 8 hours. Cost of installing new line will saved.
Optimum utilization of capacity of plant.
Fixed cost will not increase much.
On regular interval expense is to be incurred.
Training expense will increase.
Variable cost will increase.
Management is not ready to start third shift.
Second option: Increasing a new line of production.
Production will increase.
Variable cost will be less.
Capacity of plant will increase.
Only one time expense is required.
Fixed cost will increase.
Capacity of plant is not utilized...
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