Chad's Creative Concepts

Topics: Short-run, Economics, The Long Run Pages: 4 (1017 words) Published: February 16, 2007
Table of contents

Question 1:3
Question 2:4
Question 3:5
Question 4:6


Chad's creative concept is a company producing and manufacturing wood furnitures. The company builds up a good reputation for creative designs and high-quality workmanship. In the beginning the primary idea of production was custom-made furniture and eventually the whole company was entirely focused on that. The customers specified their wishes and preferences of the kind of wood. The reputation and the sales were increasing with the same speed, quite quick. Chad's creative concept starts selling to the retailer furnitures outlets which slowly moves the production to a more standard line of furniture. The buyers start demanding more strong delivery requirements than the clients from the custom line. However, the customer designed furniture was more profitable.

Now a day the company is manufacturing both custom and standard furniture. The quality of the finished product reflects the quality of the wood chosen. Both custom and standard furniture compete for processing time on the same equipment by the same craftspeople. During the past months the sales of standard furnitures have progressively increased, which lead to more precise scheduling of this line. But because of the higher sales and profit margins, the custom line holds the priority of production.

As a whole, the company has grown. Sales of custom furniture are quite strong and stable, but on the other hand the sales of standard furniture are continuing to increase gradually. But still the costs of standard line are rising as well. This is caused because of the raw materials; work in process, expensive public warehouses. The problem is also with the custom line as well, especially with the longer promised delivery time. The capacity is being pushed. Now Thomas needs to make a careful look at the whole impact of the standard line in the operation.

Question 1:
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