Instructions For Using Your Favorite Search Engine To Choose

Instructions Using Your Favorite Search Engine Choose A Product That Y

Using your favorite search engine, choose a product that you are interested in learning more about, including how the product is manufactured. After you have located information about the product, answer the following questions about it: What is a description of the product, and what company makes it? What is the process used to manufacture the product? Name the raw materials and indirect materials used in its manufacturing.

Who would be considered direct and indirect labor in the making of this product, and why? Using the cost-plus pricing approach, what target selling price would you set for the product? Explain why you chose this price. Assume you are the owner of the company that produces the product. You have been offered the option to outsource the product’s component parts instead of making them. What cost factors would need to be considered? Does it make more financial sense to outsource these parts? Explain with examples/assumptions. Assume the product was being made on an old piece of machinery that is slowing down production and causing delayed completion times. You have been given the option to either buy a new replacement piece of machinery or have this current machine reworked/repaired. Which option would you choose? What factors would be considered? State all assumptions and be sure to describe how incremental analysis would be used to make this decision.

Paper For Above instruction

The product I have selected for this analysis is the Apple iPhone 14, a flagship smartphone developed and produced by Apple Inc. The iPhone 14 represents a significant technological advancement in mobile communication, combining innovative hardware with sophisticated software to deliver a seamless user experience. As an integral device in the global smartphone market, its manufacturing process involves multiple complex stages, from design to final assembly, with a focus on high-quality materials and precise engineering.

Apple Inc., headquartered in Cupertino, California, is renowned for its innovative consumer electronics and software products. The manufacturing process of the iPhone 14 begins with designing and prototyping, where engineers develop detailed specifications for hardware and software integration. Once the design phase is complete, raw materials and components are sourced worldwide, including advanced semiconductors, display panels, batteries, and various micro-components. These materials are then transformed through several manufacturing stages, including semiconductor fabrication, metal stamping, assembly of electronic components, and software installation. The final assembly occurs primarily in factories located in China, notably by suppliers such as Foxconn and Pegatron, where precision assembly and quality control ensure the product meets Apple's stringent standards.

The raw materials used in manufacturing the iPhone 14 include silicon (for semiconductors), aluminum and glass (for the casing and display), lithium (for batteries), copper, rare earth elements, and other specialized metals. Indirect materials encompass items like lubricants, cleaning agents, and small tools used in the manufacturing process. The direct materials constitute the core components like the touchscreen display, camera modules, processor chips, and batteries, directly integrated into the finished product. Indirect materials support the manufacturing environment but are not part of the final product.

In the assembly of the iPhone 14, direct labor includes assembly line workers who handle tasks such as soldering components, installing chips, and assembling casing parts. Indirect labor involves quality control inspectors, maintenance personnel, and supervisors overseeing production operations. These roles are essential for ensuring the assembly process is efficient and that the final product adheres to quality standards. Direct labor directly contributes to the manufacturing of each unit, while indirect labor supports the overall production process without being involved in individual product assembly.

Applying the cost-plus pricing approach, suppose the total manufacturing cost per unit (including direct materials, direct labor, and manufacturing overhead) is estimated at $400. To determine an appropriate target selling price, a markup percentage is added to ensure profitability and cover administrative expenses. If a typical markup of 30% is applied, the target selling price would be $400 + (0.30 x $400) = $520. This pricing strategy ensures the company covers its costs and earns a profit margin acceptable in competitive markets. The specific markup can vary based on market demand, competition, and brand positioning, but 30% serves as a reasonable baseline for premium products like the iPhone.

Considering outsourcing component parts, the primary factors to evaluate include cost savings, quality control, supply chain reliability, and intellectual property protection. Outsourcing can reduce manufacturing costs through lower labor or material expenses in foreign countries. For instance, sourcing display panels from a specialized supplier in South Korea might be more cost-effective than in-house production. However, the risks include potential quality variations, delays, and increased dependency on external suppliers. Cost factors such as unit price, shipping costs, tariffs, and total lead times must be considered. Outsourcing may make financial sense if it results in significant cost reductions without compromising quality, such as saving $50 per unit in component production versus maintaining internal manufacturing despite higher costs for current machinery.

Regarding equipment upgrades, the decision between repairing an existing slow machinery or investing in a new machine hinges on incremental analysis. Estimated repair costs for the outdated machine might be around $20,000, which could extend its useful life by two years and improve efficiency marginally. Conversely, purchasing a new machine costs approximately $100,000 but promises higher productivity, reduced maintenance costs, and better adherence to production schedules. The decision involves comparing the additional costs against the benefits gained. For example, if the new machine increases output by 20% and reduces defect rates, the incremental revenue and savings may justify the higher investment. Analyzing the differential costs and benefits—incremental analysis—helps determine whether the repair or replacement is more financially prudent.

In conclusion, choosing whether to outsource component parts and whether to repair or replace machinery requires careful evaluation of costs, risks, and strategic benefits. A detailed incremental analysis, considering both short-term expenditures and long-term gains, is essential for making informed decisions that support profitability and operational efficiency in manufacturing. Companies must weigh factors like quality control, supply chain risks, and capital investment to select the best course of action that aligns with their strategic objectives.

References

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