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Elizabeth’s Country Wares

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ELIZABETH’S COUNTRY WARES

Written Analysis and Communication I (2016-17)

Instructor: Professor Meenakshi Sharma

Academic Associate: Girija Shankar Semuwal

Submitted on July 2nd, 2016 by

Anand Ashok Kumar

Section B

June 30, 2009

Mrs Elizabeth Hines

Elizabeth Country Wares (ECW)

Woodstock

Ontario

Canada

Dear Mrs Hines,

Subject: Recommended course of action for ECW

The enclosed report details the analysis of the current scenario at ECW and what are the options available to you to reach the desired state. Based on the available data and the financial returns I recommend you opt for purchase of decals as the next course of action. The action plan is included in the report.

Thanks and Regards,

Anand Ashok Kumar


Executive Summary

ECW has a forecast demand of 3000 Country Pitchers(CP) for 2010, and Mrs Hines is deciding on the best available option. The options include purchasing decals, outsourcing the decal production and outsourcing the production of CPs. With current production capabilities, the demand for 2010 will not be met. From a professional perspective, though Mrs Hines would like to meet these demands, she aspires to free herself from CP production so as to focus on other product lines of ECW. It is recommended that Mrs Hines opt for decal production as it meets ECW’s future demands and Mrs Hines’s professional ambitions.

* Number of words: 100

Table of Contents

Situational Analysis        

Problem        2

Options        

Criteria for Evaluation        

Evaluation of Options        

Recommendation        4

Action Plan        4

Exhibits        5

Exhibits        6

Exhibits        7


Situational Analysis

Mrs Elizabeth Hines, founder and owner of Elizabeth Country Warehouse(ECW), expects a demand forecast of 3000 units for Country Pitchers(CP) for the year 2010 from her primary customers who are member stores of a pharmacy chain. While this forecast signals a promising future for the CPs, Mrs Hines worries whether she will be able to fulfil this demand with the existing resources and wishes she can tap into the earning potential of other product lines offered by ECW. In the current situation, the pivotal factor of production of CPs is Mrs Hines’s availability. She can dedicate 8 hours on a weekly basis for CP production. The design aspect of ECW, which is the selling point of the product, is solely handled by Mrs Hines as it requires skill and precision. The two part-time employees are not qualified enough to handle the design tasks independently. In the current scenario, lack of skilled labour and Mrs Hines’s availability will constrict ECW from meeting the future demand of 3000 CPs. The existing production capabilities of ECW gives an annual production of CPs close to 1997(Exhibit 1) with $10.61(Exhibit 1) being the cost per CP production. The current scenario fetches Mrs Hines a profit of $28,742(Exhibit 1) in the wholesale market. Purely from an economic perspective, the production of CPs is profitable, and the growing demand for CPs will increase the overall gains for ECW provided the process removes its dependency on Mrs Hines and tries to meet the additional demand for products with higher margins like the Butter Churn Lamps.

If the production of CPs can be carried out without Mrs Hines’s intervention, she will be able to focus on the marketing and production of Butter Churn Lamps, which have higher margins compared to the CPs in the retail market. In a year, Mrs Hines loses out on an additional profit of $27,300(Exhibit 2) in the retail market.

The present situation calls for increasing the production capabilities to meet the forecast demands for 2010 and the expansion planned should aim to free Mrs Hines’s involvement in the production of the CPs.

Problem

How to meet the forecast demand of 3000 CPs for the next year with minimum or no participation from Mrs Hines in the production of CPs?

Options

  • Switch to Decal production
  • Outsource Decal production
  • Outsource production of CPs to China

Criteria for Evaluation

     C1. Meeting CPs market demand

     C2. Economic Feasibility

     C3. Quality of the product

     C4. Professional ambitions of Mrs Hines

Evaluation of Options

  • Switch to Decal production

C1. The forecast demand for CPs will be met on switching to decal production. Exhibit 3 gives the production details for this option. Mrs Hines’s availability will not act as a limiting factor in this option.

C2.  EWC will earn a profit of $23,658 (Exhibit 4) in the wholesale market on an annual basis. This option will require an initial investment to buy decal production factors like the computer, decal scanner and an additional kiln. Though this profit is less than the current gain, the profit earned from the selling of additional Butter Churn Lamps will be included in the profit.
(Exhibit 2 shows
$27,300 profit from Butter Churn Lamps).

C3. The quality of the product will remain unaffected since it will retain its original characteristics regarding designs and consistency. Switching to this option will give Mrs Hines the flexibility in the range of designs that can be created and the digital nature of this option will require a one-time effort in creating new designs.

C4.  Mrs Hines’s aim to free her involvement in CP production will be met on undertaking this option since a worker can learn the tasks entailed in this option in a short time frame. Consequently, she can focus more on the other product lines of EWC.

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