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1. On what dimensions does WORLD KITCHEN's Pyrex product line/brand compete? In other words, what are the OQ/OW of WORLD KITCHEN's products?
Execution
Costs that differentiate a well-run facility from a poorly run facility
· Labor productivity
· Facility utilization
· Defect rates
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2. Assume that the Charleroi plant and suppliers A through G are able to operate at 100% capacity (for an apple to apple comparison). How do the estimated price per pound in Exhibit 5 change given this assumption? Show the comparison of all 7 suppliers and WORLD KITCHEN for total price per pound, which includes variable cost, fixed cost at 100% utilization, tariffs, and freight cost per pound.
For example, WORLD KITCHEN at 100% utilization,
a. Variable cost per pound = $0.930 x 42% = $.391
b. Fixed cost per pound = $0.480 ($0.539 at 89% utilization)
Total annual fixed costs: (47,000,000 * .89) * ($.930 * .58) = $22,563,102
$22,563,102/47,000,000 = $0.480
c. Total cost per unit = $0.871
d. Tariffs cost per pound = $0 = $0.871 x 0%
e. Freight cost per pound = $0.0025
f. Total price per pound = $0.873
Do this calculation for the supplier A through G and prepare a table of comparison.
Prepare a chart showing the three costs per WORLD KITCHEN and seven suppliers: original quote, total cost per unit at 100%, total price per pound including tariffs and freight.
3. What factors beyond your analysis in question 2 should WORLD KITCHEN consider in determining whether to manufacture the Pyrex products in the Charleroi plant or to source them from a supplier?
4. Given your responses to questions 1-3, what would you recommend WORLD KITCHEN ultimately do, and why? Give at least three options with supporting justifications.
