The Thunderbird Manufacturing Company is an established institution which has been dealing with games and toys products for years. The company aims at diversifying its operations into other sections of production. This has led to the establishment of The Business Game item by the marketing department, which has discovered and believed the products produced would become famous and compete effectively with the already existing Pictionary and Trivia Pursuit.
The Business Game is a new product produced for adults. Therefore, the company has decided to promote Bonnie Muio from the Production Supervisor position to the new production manager. Bonnie Muio is required to work with John Love, the new production manager, on this latest product, The Business Game. The details possessing the required cost of materials and the components required for the assembling process is provided in Exhibit A.
|The Required Time for the Process|
|Assembly Process||Single Worker||Three Workers||The Cost of Material ($)|
Exhibit A: Time and the Costs of Material (Case 3 – 2 THE BUSINESS GAME, n.d)
The finance vice president is requesting The Business Game product managers to ensure they place their inventories at a minimum since its costs are increased tremendously. Therefore, they are expected to ensure their investment requirements does not surpass $40,000. Similarly, the materials are obtainable within a week, or they may be delivered within two weeks after the ordering process has been completed.
The following should be noted by the managers of the new line of production:
- The working hours lies between 7:30am and 4:00pm with a thirty minutes break for lunch;
- Semi-skilled workforce can be sourced from the neighboring community;
- The average earning of a worker is $93.20 daily, a reflection of $1,864 monthly pay since the working days is 20;
- The managers are allowed to hire the number of workers they require and pay them the amount they desire. However, caution is required to avoid surpassing the company’s stipulated average hourly pay of $12 for both regular and overtime;
- The company has allotted the managers land measuring 20 metres by 5 metres for the project. The land would be charge $48 for each square metre acquired;
- An additional land is available measuring 100 square metres. However, it would require the department to pay $72 for each square metre.
The forecasted market demand for the new product, The Business Game, in the first month is 3600 units at the minimum, while the following units in the consequent months were lying between 3,000 and 4,000. Similarly, the selling price for this new product is intended to be $25 for each unit. The marketing department has provided an estimated amount of $40,000, which is the company’s fixed cost.
Magnum Plastics, whose quality of their products resembles those of The Business Game product, has provided a supply offer to the management for making deliveries of the completed unit at $23. However, their delivery period takes between one to four weeks, depending on how eventful they were. The new product managers are expected to make their own decision about this offer since they are responsible for the operations in this venture. Let us all co-operate and ensure the new product becomes a success for the Thunderbird Manufacturing Company. If the managers have any issues and they feel require clarifications and need advice, please contact the General Production Manager office. Thank you.
The Thunderbird Manufacturing Company has formulated a new product, The Business Game. This product will be managed by the production managers, Bonnie Muio and John Love. The Business Game is a new product targeting a market segment made of adults in love with gaming activities. The formulation of the product is a move taken for its diversification purposes since the company possesses other well-established production lines. The company’s sales department believes this new product will be famous, enabling it to compete effectively with games such as Trivia Pursuit and Pictionary.
The Business Game product entails several tasks which were to be performed by the managers. The managers were to assemble parts which were only acquired from other producers. The assembling of components does not need any order, completing the game being 15 minutes. Similarly, labor pooling, where several employees formed a combined force for the assembling process. This resulted in the utilization of half of the stipulated period in producing a single unit and a higher number of produced Business Games in a day.
The finance vice president’s memo required the managers to maintain the inventories at a minimum since the company’s costs rose. He (vice president) further requested to be informed of the investment’s needs surpass $40,000. The company’s operation would be between 7.30 am and 4.00 pm with a half an hour break for lunch. In a month, working took an averagely of 20 days to hire and pay the workers being left on the production manager. The production manager was required to take caution in the process not to exceed the average paying set amount of $12 on an hourly basis. The payment, in this case, would be for the varying regular and overtime periods. A semi-skilled labor force would be drawn from the community around the company. The payable wages would be $11.65 hourly, and on average daily earnings would be $93.20.
The production manager is faced with the problem of finding a site for setting up the company. He is allotted 20 metres by 5 metres land for operations arrangement with an annual charge fee for a square metre being $48. Similarly, additional land was availed but was charged at $72 for each square metre. The manager planned to use the space for setting up the assembly operations, storing raw material and finished products inventories. The Business Game required overhead manufacturing costs estimated at $4,120 monthly.
The managers’ ordering process for the materials would be accomplished within a week, with delays at times pushing the delivery to two weeks. The product manager further revealed The Business Games’ forecasted market demand to be 3600 monthly units for at least the initial year and a range of between 3000 and 4000. Avoiding stock-outs by the products’ manager would prevent impulses and assist in cost-cutting. The game selling price was placed at $25, with the sales department making $40,000 fixed costs estimated. Magnum Plastics provided a supply offer to The Business Game product managers for making deliveries of the completed unit at $23. The offer was good since the quality of their products resembled the once of The Business Game. However, their delivery period took between one to four weeks, dependent on how eventful they were.
Case 3 – 2 THE BUSINESS GAME (n.d).