Problems:
Decision making :Forecasting
We manufacture wood front doors with glass inserts We $5 of wood, $2 of glass, $10 of metal fixtures, and $1.50 of plastics We assemble and finshed the wooe, cut the glass, and assemble the product in our two plants (Idaho and North Carolina). One plant ships to customers west of the Mississippi, the other to customers east of the Mississipi. Shipping averages $22 per door. Packaging material costs $4. Labor is - Hrly Rate Time Activity
$20 1 hr wood assembly
$25 0.6 hr wood finishing
$18 0.8 hr glass and metal assembly
$15 0.15 hr packaging
Overhead of the plant is $25 per door
Sales and advertising is $30 per door
Doors sell for an average price of $225 each
One door in 12 has some damage or flaws on arrival at the customer site.
a. How should we approach forecasting to support our business decsions. Explain in detail.
b. What can we do to keep our business running at optimum return - max profit? What options might we consider over time?
c. What options do we have for handling damaged/flawed merchandise? Which do you recommend give the state of the economy and the outlook for the next few years? Explain.