The next few questions relate to the attached Wall Street article on K’Nex.
1. What event and criteria drove K’Nex to bring production back from China to their home factory?
2. Why did these criteria become so important?
3. Their decision to bring some of their overseas production back to U.S.A. had a “domino effect” through several Operations Management decisions (reference: pages 7, 39, 41). Discuss six of the Operations Management decisions that K’Nex made. State what the Operation Management decision was and any accompanying pros and cons. Be sure to include what Process Strategy (as one of the six O.M. decisions) you believe K’Nex has employed. Explain your reasons for choosing this particular Process Strategy.
4. Review the Competitive Advantage table on page 38 or the text. What aspects of the competitive advantage did K’Nex leverage? Support your answer with examples from the article.
The next three questions pertain to Wheeled Coach (the world’s largest manufacturer of ambulances) as discussed on pages 278 and 378 of the text.
5. What are the key characteristics that would classify Wheeled Coach as a repetitive focus process strategy?
6. Let’s assume you are a new hire at Wheeled Coach. Your manager asks you to review their manufacturing process to see if there are any steps that can be eliminated as not adding value. What tools would you employ to complete this assignment? Please include a brief description of each one, a diagram is not needed.
7. What Operation Management decisions would need to be made to change their repetitive focus process strategy to:
a. Process Focused?
b. Product Focused?
8. XXX Manufacturing plans to increase capacity by adding new equipment. They have received two proposals.
Fixed Cost Variable Cost/Unit
Proposal A $32,000 $12.00
Proposal B $50,000 $10.00
The revenue generated by each unit is $20.00.
a. What is the break-even point in units (when profit = zero) for Proposal A?
b. What is the break-even point in units (when profit = zero) for Proposal B?
c. Draw the lines represented by both Proposal A and B on an X-Y coordinate graph with Units on the X axis and Profits on the Y axis.
Use the form y = mx + b or
Profit = (Revenue/unit – Variable cost/unit) * Units – Fixed Cost
d. At what unit volume do the lines intersect for Proposal A and B?
Supply Chain Problem
9. You have recently joined a consulting firm that specializes in supply chain performance. A client has asked that you benchmark their firm’s supply chain performance against the industry average performance. You have assembled the data below:
Client Industry Average
Sales = Net Revenue $100,000 $120,000
Cost of Sales $ 75,000 $ 96,000
Inventory $ 7,500 $ 8,700
Total Assets $ 45,000 $ 60,000
Net income $ 2,000 $ 2,200
a. How does your client's supply chain performance compare to the industry average? Support your answer with two of the appropriate metrics.
b. How does your client’s overall Return on Assets compare to the industry average? Support your answer with the appropriate metric.
c. What conclusion do you make about overall performance of the client relative to the industry average?