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Essay / Research Paper Abstract
This 3-page paper details the decision that fictitious company ClearHear must make in terms of manufacturing cell phones in house or outsourcing them. Bibliography lists 1 source.
Page Count:
3 pages (~225 words per page)
File: AS43_MTclearhea.rtf
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Unformatted sample text from the term paper:
cost-opportunity basis, in other words, weighing the opportunity against the potential cost, and then determining the return on investment. In this fictional scenario,
ClearHear, which makes cell phones, has to make a decision about whether to accept an order for a product that would require displacing another product from production. Here are the
major points: > ClearHear runs two production lines at its factory. One produces Alpha phones that sell for $20 per unit. The other produces the Beta model, which has
more features, costs more to produce, and sells for $30. > Kendra Sherman of ClearHear has received an order for 100,000 cell phones that are identical to ClearHears Alpha
model to support major chains Big Box promotion. The delivery date is in 90 days. Big Box, though it wants all the phones, doesnt want to pay more than $15
per unit. > Production manager Lisa Normal has an excess capacity of 70,000 phones over the next three months, with her bonus dependent on running the factory at
capacity - though the larger part of her bonus is based on total profitability. > With 70,000 phones in hand, Lisa knows she can switch production of 30,000 units
from the Beta line to the Alpha line to complete the order - but this would be at a definite loss. > In the meantime, an OEM has approached
Lisa with a "clone" prototype of ClearHears Alpha unit. This company claims it can produce up to 100,000 units on short notice at a price of $14 per unit.
> The previous months profitability reports showed that unit profits were good and cost controls met factory standards. But capacity underutilization meant Lisa and the factory were deprived of profits
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