TenAlpina_study_case.docx.docx - TenAlpina study case...

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TenAlpina study case 1-Guilia is clearly intrigued by the options that have opened for her. If she was to accept the customer's contract and take over the forge, how would her business model change? Current cost model: Variable cost= 1.45+9=10.45$ Fixed cost=0 Outsourcing cost model: Variable costs : supplies=0.11 = (110/1000) Electricity= 0.18= ((1962-1908)/(1300-1000)) Material =1.45 Total per unit=1.74 Fixed costs: labor=345,000 Rent= 33,000 Electricity=20736=((1962-(0.18*1300))*12 Administrative costs=7200=(600*12) Total per year=420,291 If she accepts the customer’s contract the cost would change going from outsourcing to insourcing, however the revenue wouldn’t be affected as the production alternatives won’t have a strong impact on the revenue’s model. 2. Using Stanley's operating cost as your best-guess data about operating the forge, perform a simple break-even analysis for the two basic business model configurations- the current outsourcing arrangement versus owning and operating the forge.

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