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As a production manager for rmc what do you recommend why

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Comment 0 Step 3 of 4 2 While the above analysis is both conservative and realistic, both FMS salesperson and plant manager must consider best and worst-case scenarios, respectively. A conservative plant manager is most concerned with maintaining their current line and growth with limited disruption.

These assumptions must be conservative. Installation poses the largest threat to current product lines and cost savings.

Production Management

Utilization, like installation, could very likely be an overestimate. At this level of utilization the ROI drastically drops and profit from product lines drops off due to low volume. Inventory and throughput are direct functions of utilization.

A conservative estimate of utilization would point to a much larger inventory and lower throughput each decreasing ROI of the project. Physical space is a set amount, and will not decrease even in conservative estimates. If the 14,000-square foot space is not put to efficient and profitable use, then optimistic contributions of a new product line cannot be considered in ROI estimation. ROI, and subsequently payback period, is already below company standards.

At a certain point, investing in Treasury Bills or CDs provides the same payoff with no risk and no transition period.

Installation carries a consistent price, but companies with infrastructure may have already invested in infrastructure and personnel that reduce redundancy costs. Due to the high throughput and low inventory capability of the FMS system, the potential for greater utilization is higher.

While the current system may have comparable utilization, a product or market change would render the current system unusable. This would not be the case with the new FMS system. A higher estimate of utilization would point to a much lower inventory and higher throughput each increasing ROI of the project. Physical space is a set amount, and will not increase even in liberal estimates.

If the 14,000-square foot space is put to efficient and profitable use, then a whole another product line could be added to the company.

  • Due to the high throughput and low inventory capability of the FMS system, the potential for greater utilization is higher;
  • ROI, and subsequently payback period, is below company standards;
  • Installation carries a consistent price, but companies with infrastructure may have already invested in infrastructure and personnel that reduce redundancy costs;
  • This creates an unaccounted for ROI contributor;
  • Physical space is a set amount, and will not increase even in liberal estimates.

This creates an unaccounted for ROI contributor. ROI, and subsequently payback period, is below company standards. That being said, the FMS system allows the company to quickly and efficiently changes product lines important, but not accounted for in ROI.