Session17handout

Session17handout - Supply Chain Modeling...

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Supply Chain Modeling Session 17: Capacity Management- Seagate Atalay Atasu
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Objective of Today’s Class Explore the hard disk drive industry  Understand Seagate’s product and manufacturing  strategy How Seagate makes capacity investment  decisions in the presence of demand uncertainty? Explore tradeoffs in capacity investment  decisions. Another application of the newsvendor  model (marginal analysis) Quantify the benefits of operational hedging
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Seagate Products: Cheetah
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Seagate Products: Barracuda
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Seagate Technologies What is Seagate’s competitive strategy?   What about the competitive environment?   Why does Seagate follow a strategy of vertical  integration? What is the difference in cost structure and risk  between Quantum’s and Seagate’s business  model?
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Difference in cost-structure and risk between Quantum and Seagate business models Volume/Sale s Cost (Seagate) Revenu e Cost (Quantum) Fixed cost Break even point for Quantum Break even point for Seagate Seagate’s Profit>Quantum’s Profit
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When is Seagate Business Model Profitable? Seagate Technology Inc.: Net Jumps Fivefold as Demand For Hard-Disk Drives Balloons , Oct 19, 2005 Seagate Technology Inc.'s fiscal first-quarter net income increased fivefold as the maker of hard-disk drives benefited from demand for notebook computers and consumer electronics. The Scotts Valley, Calif., company's profit soared to $272 million, or 54 cents a share, in the quarter ended Sept. 30, from $54 million, or 11 cents a share, a year earlier. Sales jumped 34% to $2.09 billion from $1.56 billion. Seagate shipped 3.9 million drives into consumer- electronics applications, up 34%. Desktop shipments continued to make up the vast majority of Seagate's overall product line, as the company shipped 17.4 million drives, up 16%. Seagate also said its board authorized the repurchase of as much as $400 million of common stock.
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What kind of risks is Seagate exposed to?
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Session17handout - Supply Chain Modeling...

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