Assignment 1: Operations Decision
Assume you have been hired as a managing consultant by a company to offer some advice that will help it make a decision as to whether it should shut down completely or continue its operations. It currently uses 100 workers to produce 6,000 units of output per month (working 20 days / month). The daily wage (per worker) is $70, and the price of the firm’s output is $32. The cost of other variable inputs is $2,000 per day. You are told that the firm’s fixed cost is “high enough” so that the firm’s total costs exceed its total revenue. The marginal cost of the last unit is $30.
This assignment allows you to determine the specific details about this fictitious company in order to conduct an environmental scan of this company.
Write a four (4) page paper in which you:
1. Briefly describe the details of the fictitious business that you created for this assignment.
2. Assess the current environmental scan factors. Determine the factors that will have the greatest impact on plant operations and management’s decision to continue or discontinue operations.
3. Evaluate the financial performance of the company using the information provided in the scenario. Consider all the key drivers of performance, such as company profit or loss for both the short term and long term. Be sure to show the calculations that helped you reach your conclusions.
4. Recommend how the company can improve its profitability. Then, develop a brief plan to implement the recommendations.
5. Assess the circumstances in which the company should discontinue operations. Provide a rationale with your response.
6. Use at least four (4) high-quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources.
Your assignment must follow these formatting requirements:
Be typed, double-spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
Apply the concepts of supply and demand to determine the impact of changes in market conditions in the short run and long run, and the economic impact on a company’s operations.
Examine the factors that affect short-term and long-term production decisions.
Use short-run and long-run firm production and cost functions to evaluate the impact on industries.
Use technology and information resources to research issues in managerial economics and globalization.
Write clearly and concisely about managerial economics and globalization using proper writing mechanics.