Industrial Grinders Essay Example for Free

industrial milling machinerys EssayWith the introduction of slight bellly pliable fences by company, Henri Poulenc, Industrial Grinders is faced with a decision of a total changeover from brand peal to charge plate go for their machines that would also fit similar machines manufactured by other companies. Henri Poulenc has introduced the less big-ticket(prenominal) fictile addresss in a sm exclusively market bear upon 10% of Industrial Grinders gross sales . Industrial Grinders believes the market get out eventu wholey change-over to all pliant basketball hoops. Industrial Grinders mustinessiness determine a timeline for changing occupation. It is estimated that doing could begin by mid-September. With rough brand name and steel rings already in list, IG must merchandise-off subsisting stock-take before changing total occupation to all ductile rings.a. Plastic Rings versus Steel RingsSteel rings last approximately 2 monthsPlastic rings last appro ximately 8 months100 steel rings cost $263.85 to mother100 plastic rings cost $66.60 to produceAt a weekly profit/Loss, network income for 690 steel units would be $390.00 At a weekly profit/Loss, Net income for 172.5 plastic units would be $437.80If sales continue at 690 units per week from May to mid-September, 10,350units will have been sold, leaving 15,100 steel rings in stock at a cost value of $39,713. This would require approximately 22 more weeks of sales to deplete inventory. As steel rings will last for two months, the sale of existing steel rings will have a faster turn- around time for continued depletion of stock. Knowing that Henri Poulenc is modify sales in only a small good deal of Industrial Grinders territory, retooling for plastics should also begin spell steel rings ar cosmos phased out. Industrial Grinders can continue to charge the same amount, or more, for its plastic rings, as Henry Poulenc has set the standard in pricing. During the upcoming slack pe riod, the company will employ workers at 70% of regular wages to finish all steel production, plot regular staff completes retooling on available machines.Examine alternative theories, assumptions and ideasa. Rings account for a substantial portion of Industrial Grinders revenue. b. Plastic rings, sold by Henry Poulenc, are sold for at least the same amount asIndustrial Grinders steel rings.c. Only 10% of Industrial Grinders market is touch by Henry Poulenc. d. Henry Poulenc is the only company producing plastic rings. e. Shipping weight for plastic rings is less than steel rings. f. As plastic ring use spreads, the customer will demand the longer lasting plastic ring. g. Steel ring production will be phased out due to market demand for plastic rings.As the prox production of rings within the industry will undoubtedly change from steel to plastic, Industrial Grinders must wear swift action to keep up with industry changes and customer needs jumping ahead of notwithstanding co mpetition. However, taking into consideration the 8 month life of plastic rings and their lower production cost as opposed to the 2 month life of steel rings at a high production cost, sales must increase to sustain the higher profit margin of plastic rings. lay the appropriate actions, alternatives or conclusions for the caseIndustrial Grinders should change to plastic ring production. As plasticrings have been introduced by competitor, Henry Poulenc, rings with a longer life will be in increasing demand by customers. Industrial Grinders must forge ahead and heavily market the plastic rings as a better product for their customers. The plastic rings are less expensive to make, less costly to ship but have a longer life on machines. Although near revenue will be lost due to the longer life of plastic, Industrial Grinders will subtract losses with added sales.2. InventoryAnalyzing the behave of the problem or situationA changeover to plastic rings poses a problem for Industrial G rinders. Its inventory of special steel and inventory of produced steel rings must be dealt with before or during the production of plastic rings. a. Raw SteelThe raw steel inventory cost value is $26,444. The steel cannot be sold to another party and will have to be used or counted as a loss to the company.b. Steel RingsThe steel ring inventory cost value is $67,149. These rings could be sold within the existing market.The total cost of raw steel and steel rings inventory exceeds $93,000.00. The decision whether to use all raw steel and sell all existing steel rings becomes a major concern within Industrial Grinders attention. Examine alternative theories, assumptions and ideasa. Industrial Grinders wants to change from steel rings to more cost legal plastic rings. b. Management does not want to absorb the cost of unused inventory. c. Not all worry agrees on use of raw steel inventory.d. The introduction of plastic rings will spread end-to-end the industry. e. Industrial Grinde rs could produce steel rings while retooling some machines for plastic production. f. Industrial Grinders could sell existing steel rings and take a loss on raw steel. Determine the appropriate actions, alternatives or conclusions for the caseIndustrial Grinders is faced with a financial decision regarding dispositionof current inventory. Believing that the future lies with the more cost effective plastic rings, IG should continue to sell existing steel ring inventory while producing further steel rings, using the raw steel inventory on hand. The lay down time could use excess labor to deplete the raw steel. During this period, retooling could also occur and plastic ring production would begin. The machining changeover would be possible with a minimal cost of $1800.With Henry Poulenc affecting only 10% of IG sales, Industrial Grinders should deplete stock and introduce plastic rings. 3. Management ConcernsAnalyzing the cause or problem of the situationWithin management, it is agree d that plastic rings should be produced. However, the disposition of inventory on hand is not agreed upon between sales management / engineering and plant management/ parent company management. a. Sales Manager, Harry Greiner, believes inventory could be counted as a loss. Plastic production should begin and steel rings should no longer be sold. Selling both steel and plastic would be cause for market retaliation. b. Development Engineer , Anders Ericsson, is come to nigh inventory not being depleted by plastic ring production in September. c. German Plant General Manager, Lawrence Bridgeman, is concerned about inventory. He believes, at the onset, that plastic rings should only be sold in markets affected by Henry Poulenc. d. Parent Company Head, Hein Van Boetzalaer, agrees to plastic rings but states that IG must use inventory. Examine alternative theories, assumptions and ideasa. All but the Sales Manager are concerned about inventory cost. b. Selling plastic rings within some markets may cause steel ring sales to slump when other customers learn of the plastic rings and their longer life. c. The raw inventory could be in production during plant down time. d. The existing steel rings could be sold while the raw steel could be accepted as a loss. e. Henry Poulenc is the only company producing plastic rings. f. IG has time within the industry to sell all existing inventory while retooling for prompt production of plastic rings. Determine the appropriate actions, alternatives or conclusions for the caseIndustrial Grinders upper management should apply the course of using and selling the existing inventory while retooling for plastic rings. Although sales and engineering opinions are taken into account, the idea of taking a loss for inventory on hand is unacceptable in IGs current position. Henry Poulenc only affects 10% of IGs current market. pep pill management must make the decision on the companys future operations. It is not proved that IGs total mar ket must immediately receive plastic rings. Depleting inventory, while go plastic rings in the affected market , is an acceptable alternative. Depleting inventory first, then changing to all plastic rings is also an acceptable alternative. However, the parent company must decide the fate of inventory and future plastic production.