CUMBERLAND METAL INDUSTRIES
Overview
Cumberland Metal Industries (CMI) is seeking to diversify its product line. A Houston area sales representative has made us aware of the use of curled metal in pile driving as a cushion to absorb shock. The curled metal pads have been tested by two contracting groups, Colerick and Fazio, both with promising success and noticeable advantages over the current asbestos pads.
Colerick has requested pricing so that they can purchase and use our pads on other job sites. Colerick has been told CMI will give them pricing information by the end of the week. Price is the first priority which will be analyzed by cost savings to company, manufacturing costs, and break-even volume. Marketing options will also be analyzed based on the market share, market size, and sales force size.
Analysis
Benefits of Coiled Metal Pads
Coiled metal pads drive 30 times more piles per pad than asbestos pads because they transfer more force and prevent shock while creating less heat than the conventional asbestos pads (Exhibit 1). This also helps to prevent piles from vibrating or cracking. Coiled metal pads only heated up to 250ºF, or 450º less than asbestos pads. Health dangers associated with asbestos have also made those who use the asbestos pads wary of the risks.
Value to Contractors
From the two experiments with CMI's coiled pads the contractors averaged 30% more feet driven per hour with our coiled pads over typical asbestos pads. The pads also drove 2800% more piles per set of pads than did the asbestos pads. The contractors averaged 630 asbestos pads used for the project; at a cost of $1,575. The total time to change sets was 700 minutes. With our coiled metal pads they used 11 pads with a change time...
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Total FC $25,920 $45,920 $59,170 $45,920 $59,170
Break Even Volume 213.88 246.03 140.32 246.03 140.32
Estimated with Purchase of $50,000 of Permanent Tooling
Variable
Material $15.64 $15.64 $15.64 $15.64 $15.64
Labor $11.64 $11.64 $11.64 $11.64 $11.64
Total Variable $27.28 $27.28 $27.28 $27.28 $27.28
Fixed OH @ 360%
of direct labor $41.90 $41.90 $41.90 $41.90 $41.90
Sales Force $0.00 $80.00 $133.00 $80.00 $133.00 *
Total Fixed Cost $41.90 $121.90 $174.90 $121.90 $174.90
Total MF cost $69.18 $149.18 $202.18 $149.18 $202.18
CM $56.60 $122.06 $303.27 $122.06 $303.27
Price $125.78 $271.24 $505.45 $271.24 $505.45
Total FC $10,475 $30,475 $43,725 $30,475 $43,725
Break Even Volume 185.06 249.68 144.18 249.68 144.18
*Sales force cost per unit= [(40000*reps) / 12 months] / units per month
Company Overview – Caterpillar Tractor Co. was founded in 1925 and was the product of a merger between The Holt Manufacturing Company, owned by BBB HHH, and C.L Best Tractor Co., owned by DDD BBB. The company had a great demand in WWI and this lead to the first foreign operation of many to come in the future.
Based on the textbook and my understanding, whenever there are negotiations between a procurer and a supplier regarding a competitive bidding, the first thing that might be favored is the scope of the project, meaning both will sit down and discuss the entire project prior the work begins. Meanwhile, during the negotiations, evaluation criteria should be clear, and stated and defined. As the evaluation is based on the criteria stated and the procurer can request or ask the supplier’s opinions on certain specifications and where things can be improved.
- CIMA Mountaineering customers select their products perhaps based on their design, the quality of workmanship, and the safety features. I feel that price should not have an influence in the decision-making process because dealing with this case the purchasing process should be based on the safety feature, which is more important than the price tag.
Maximize the interaction with in the group to facilitate unity of the three individual groups (management and workloads)
The James Hardie Industries is a an industrial building materials company, head office in Ireland, manufactory and developing materials, technologies and processes for the production of building materials. For a great deal of the twentieth century, James Hardie was the leading producer of asbestos cement sheet and other building products, which used asbestos as a support material in Australia. However working with James Hardies’ products containing asbestos caused people to develop asbestosis and malignant mesothelioma. As James Hardie was one of the companies involved in the mining of asb...
Cumberland Metal Industries (CMI), which was historically one of the largest manufacturers of curled metal products in the country, has developed a new product. This product is a metal cushion pad which is to be used with large crane-pile driving activities. The cushion is to prevent the shock of the hammer from damaging the pile. CMI’s cushion pad is a “one-of-a-kind” product as there is nothing similar on the market today making comparisons difficult. Upon successful tests conducted alongside Colerick Foundation Company (Colerick), CMI now seeks to launch this new product to the market. Not unlike many other companies that develop new products, CMI is struggling to set a market price to go along with a marketing strategy for the cushion pads.
As discussed earlier, Baldwin products are priced with the competition in mind. Management is not concerned with setting high prices to signal unattainable cutting edge products, nor is it pursuing to achieve the goals of matching low prices by selling higher quantities of products. In lieu, value pricing is practiced so that our customers feel comfortable purchasing our products and so they feel comfortable coming back.
(Potential $loss if reduce price = 94962.yr but losing market would be a bigger problem.)
Signode Industries Inc. - Providing Packaging Solutions Executive Summary SIGNODE INDUSTRY: DILEMMA AT HAND: Mr. Gary Reed, President of Signode Industries packaging division, is in a dilemma as what he should be his course of action to meet the 6.8% increase in price of cold rolled steel- the raw material used in manufacture of Signode’s primary product, steel strapping. There are few options given in the case: Increase Signode’s strapping prices to offset the increased price of cold – rolled steel. Maintain Signode’s current book prices as increasing prices would affect sales force morale. Introduce price-flex model as proposed by Jack Davis i.e. a kind of selective discounting or premium charging for customized services. Recommendations Reason: (All data in accordance to 1983) In accordance to Exhibit 1: Sales of Packaging Division of the company = $285,950 In accordance to Table A: Sales of Apex = 33.3% of $285,950 Sales of BBM = 26.8% of $285,950 Sales of HDM = 33.4% of $285,950 Sales of Customized Products = 6.5% of $285,950 In accordance to Exhibit 4: Similarly, For Apex: As it has a capacity utilization of 71% now, Suppose a sale is $100. Then contribution is $39.15 Therefore variable cost is $60.85. Now if we increase the capacity utilization to 100%, Sales becomes $ 141 since production increases by [(100-71)/71] * 100 = 41% Variable Cost = 141% of 60.85 = $85.8 Fixed Cost = 69.38% * 12.3 = $8.53 Total Cost = 85.8+8.53 = $94.33 EBIT = Sales – Variable cost – Fixed Cost = $46.67 % of EBIT = [(46.67/141) * 100] = 33.09% Suppose the company sales 100x units, the total cost was 69.38. Thus per unit cost was .6938. Now the company sells 141x units, the total cost...
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A cross functional team of marketing experts, engineers and cost accountants determine the cost of a product early in the design and development phase based on what customers desire in a product and what they are willing to pay for the new product. Implementing this market oriented approach enables firms to set the desired profit margin early if not prior to the product development process. Two methods are used to set target cost: subtractive, addition. Subtractive is the method of determining the sales price and subtracting the desired margin to arrive at the target cost. Addition is the method used when the sum of all cost plus the desired margin provide the firm the target cost. Target costing is often subdivided into
A price is considered as a function of costs and benefits. The entire product a buying center buys is much more than a physical item. They are buying a given level of product quality, technical service and delivery reliability. There are other influences may be of importance for the buying decisions like the reputation of the supplier, a feeling of security and personal relationships.
My understanding further broadened with 2 internships of 2 weeks each that I underwent during my under graduation. The first internship was at Trident and Oberoi Hotels, Hyderabad where I was engaged in the design and execution of pile foundation and the pile load testing activity. As a result, I grasped the construction sequence of bored cast in-situ pile and its respective load testing using Kentledge method. My second internship was at Airport Authority o...
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