Mt435

In: Business and Management

Submitted By reinasant
Words 1098
Pages 5
The Competitiveness of Albatross Anchor
Name
MT/435 Operations Management
University
Prof:
Date
Introduction The purpose of this paper is to discuss the competitiveness of Albatross Anchor in regards with the costs, speed of the manufacturing process from order to finished product, flexibility in filling orders, technology, capacity and facilities, and service to customers. Then, the paper will determine ways to reduce costs by determining the process with the lowest breakeven point.
Albatross Anchor is a company that manufactures and sells anchors by wholesale. The company founded in 1976, and it grew exponentially to reach more than 100 employees. The company’s production facility and administrative offices are in the same location. Albatross is facing several issues that stand between the company and its success upon the competitors.
Company Analysis
1. Costs According to Frank (1998), the cost of producing a unit of a good is the cost associated with production divided by the amount (number) of units produced. The cost of manufacturing for Albatross Anchor is $8 per pound for mushroom/bell anchors and $11 per pound for snag hook anchors.
The economies of scale represent the efficiency increase in production as the amount of goods manufactured rises. According to Russell and Taylor (2011) think that economies of scale “occur when it costs less per unit to produce or operate at high levels of output” (p. 259). For that reason companies needs to achieve the lower average unit cost through a higher production because fixed costs are divided by a larger number of goods. Albatross Anchor does not realize economies of scale because of its inability to manufacturer more than usual. The company is inefficient from an operational point of view because it is not able to produce at least at its capacity of manufacturing; they only manufacture small…...

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