Assignment # 1 w KEY

7/16/2019 Assignment # 1 w KEY

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Assignment # 1: Engineering Management

Due Date: Saturday 10/10/2015

Please answer the following four questions:

Question 1

Tom Taylor, the Sales Manager, was told by his boss, Carl Bauer, to tae an order

!rom a new "ustomer !or a bat"h o! #rodu"ts$ Tom new that the #rodu"ts in%ol%ed

would only #artially meet the "ustomer&s re'uirements and that Carl new that$

But, Carl insisted that the order was too %aluable to lose$ (hat should Tom do)

SOL.

There are four reasons why Tom Taylor takes the order as directed:

A. It is not an accepted practice in the U.S. to disobey one’s boss.Insubordination is a valid cause for instant discharge.

. There is a chance that !arl auer knows something about thiscustomer that Tom does not.

!. Tom’s understanding of the customer"s re#uirements could beoutdated.

$. Should this new customer become dissatisfied at a later time% !arlauer will be fully responsible for it. Tom Taylor need not beconcerned about it. &urthermore% remedial action can be readily takenat that time to make good with this customer.

Question 2

*an"y Bush, the #lant manager, needs to de"ide whether to mae or buy a

"om#onent !or the "om#any&s "ore #rodu"t$ She would lie the ad%i"e o! her

#rodu"tion su#er%isors, sin"e they must im#lement her e%entual de"isions$

+owe%er, she !ears that the su#er%isors will be biased towards maing the



"om#onent in house, as they tend to !a%or retaining more wor !or their #eo#le$

(hat should *an"y Bush do)

SOL.

'ancy ush should do the following:

A. $evelop the evaluation criteria for the decision (e.g.% cost%speed of delivery% time to market% #uality control% supplierrelationship% availability of plant capacity% novelty of technology%tooling re#uirements for in)house production% material procurement%etc.* and make a preliminary assessment.

. Talk to both supervisors separately and enlist their evaluation based on the above criteria.

!.* +eview the inputs of both supervisors and make a decision. &ore,ample% decide to buy now and plan for in)house production in oneyear if the supplier relationship does not work out.

$.* !ommunicate with the supervisors and e,plain his rationale for thefinal decision.

Question 3

The engineering Manager #ro#oses to install an automated bar "ode s"anner

"osting -,000$ +e estimates that he "an sa%e about 100 hours o! labor time #er

month be"ause o! its s#eed$ +e !urther reasons that at the wage rate o! 15/hour,

the bene.t o! using the s"anner is 1,500/month and the s"anner "an be #aid ba"

in 2$ months$ s the #resident o! the "om#any, do you agree or disagree

with the way he "om#utes the "ost/bene.t ratio) (hy and why not)

SOL.

The answer to this #uestion is a definite -maybe. /bviously% hiscomputation of the cost is correct. 0owever% his estimation of thereali1able benefit is #uestionable.

The engineering manager has so far failed to show that 233 hoursof labor saved per month can be effectively used to yield tangible and measurable financial benefit for the company. If the saved labor time



is used by workers to drink more coffee and4or sociali1e more% thenthere is no evidence that the president will see a benefit of526334month. +eal benefits are possible under the followingcircumstances:

A. If% because of the saved labor time% the company can now reduce

the labor force by half a person per year (e.g.% by way of scaled downovertime and4or switching one worker from full time to part)time*%then the saving of 527%3334year (or 526334month* can be effectivelyreali1ed.

. If the saved labor time can be used to generate new sales orders(e.g.% by way of shuffling the work around to unload a sales person* which in turn would bring in new sales revenue% then the benefit isalso real and documentable in financial terms.

In the absence of any evidence to demonstrate how the saved timecan be translated into real benefit% the claim of the engineering

manager is at best a possibility with unknown probability. To supportthe e#uipment proposal the engineering manager needs to go one stepfurther in defining how the benefit can indeed be reali1ed% as hiscurrent benefit to cost analysis is too vague.

Question

There are always riss asso"iated with the e#erimentation o! a new

manu!a"turing #ro"ess or with the entry into a new global maret, the riss

o! !ailure$ +ow should one de"ide to #ro"eed or not to #ro"eed with a risy

%enture) (hat is the #ro#er le%el o! riss to tae)

SOL.

All new !entures ha!e inherent un"ertainties. n $e"i$ing to ta%e theris%s of going forwar$ with the !enture& se!eral questions nee$ to 'eanswere$ (rst:

A. Shoul$ it lu"%il) turn out to 'e su""essful& what is the

ma*imum +a),out -e.g.& !alue of the !enture/

0. h) is the !enture $eeme$ to 'e ris%)/ ow li%el) are allris% fa"tors e*+e"te$ to +la) out in realit)/ hat "ontingen") ste+s area!aila'le to minimie the im+a"t of these ris%) fa"tors/ Answers to thesequestions will lea$ to an assessment of the +ro'a'ilit) of su""ess for the!enture.



4. Shoul$ the !enture fail -e.g.& time $ela)& re+utation&"om+an) 'an%ru+t")& loss of mar%et share& et".& what is the a$!erseim+a"t on "om+an)/

A t)+i"al set of gui$elines for a!oi$ing ta%ing unwarrante$ ris%s ma)in"lu$e the following:

A. 5he "ost of going forwar$ with the !enture must 'e mu"hsmaller than the e*+e"te$ !alue of the ris%) !enture -the +ro'a'ilit) ofsu""ess multi+lie$ ') the ma*imum +a),out of !enture.

0. 5he a$!erse im+a"t on "om+an) must 'e smaller than thema*imum +a),out of the !enture.

Question 6

"om#any has always been !o"used on the high3'uality high3#ri"e end o!

the maret$ *ow, maret intelligen"e indi"ates that some "om#etitors are

#lanning to enter the low3#ri"e low3'uality end o! the maret$ (hat should

the "om#any do)

SOL.

O'!iousl)& the "om+an) must (n$ wa)s to +rote"t its "urrent mar%et

share in the high,+ri"e& high,qualit) ni"he. ithout +rote"tion& this ni"he

"oul$ 'e"ome slowl) ero$e$ ') the anti"i+ate$ intro$u"tion of a new low,

+ri"e& low qualit) +ro$u"t ') the "om+etition. 5ime is of essen"e an$ the

"om+an) must a"t qui"%l). 5hus& the strategi" +lan to +rote"t "om+an)7s

+osition shoul$ in"lu$e:

A. E*+lore the o+tion of im+orting a low,+ri"e an$ low,qualit) +ro$u"t to

the mar%et an$ ma%e inquiries a'out "ost& +erforman"e& $eli!er) an$logisti"s.

0. 8ollow the "om+etition "losel) to un$erstan$ their new +ro$u"ts an$e!aluate the mar%et rea"tion to them.

4. f the mar%et e*hi'its signs of a""e+ting the "om+etition7s new+ro$u"ts& then the "om+an) shoul$ intro$u"e the im+orte$ +ro$u"ts to



"om+ete $ire"tl) at a $is"ounte$ +ri"e. 5he +ur+ose is to rea"h an$un$erstan$ "ustomers in this new low,+ri"e& low,qualit) ni"he so thatthe) ma) 'e ser!e$ 'etter in the future.

One o'!ious alternati!e is for the "om+an) to $ri!e out the"om+etition using the im+orts& 'ase$ on a 9se"on$ 'ran$ strateg).

;. f the "om+an) registers a $e"line of sales in the high,+ri"e an$ high,qualit) mar%et ni"he& then it shoul$ "onsi$er the $e!elo+ment of newme$ium,+ri"e an$ me$ium,qualit) +ro$u"ts in or$er to re"o!er some of its lost "ustomers.

Assignment # 1 w KEY

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