Senco Electronics Case Study
1. If I were Skip Grenoble, which alternative would you advise Ms. Shannon to implement? What criteria would you use to arrive at your decision?
If I were Skip Grenoble, I would advise Ms. Shannon to utilize air transportation as this would afford Senco greater flexibility and responsiveness in reacting to fluctuations in demand in a high tech industry that is characterized by short product life cycle. As a U.S based contract manufacturer of laptop and personal computers, in my opinion, Senco is providing a fairly high substitutable service. It this case, it then follows that Senco needs to provide higher customer service levels in order to gain repeat customers. Air will provide higher customer
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Nevertheless, Senco would also need to take into account the disadvantages that come along with utilizing ocean transportation such as longer transit time that will contribute to it becoming less flexible and responsive to fluctuations in demand from customers operating in the high tech industry known for its short product life cycles. Hence with regards to doing a long-run/dynamice analysis, I would recommend ocean transportation solely upon the considerations of projected output. However, I believe that there is more to read into than just output projections when making decisions such as this. In this case, I believe that sub optimization may be required in order to help Senco better achieve its profit and service goals. Hence, taking the analysis into a broader spectrum of consideration than just projected output over a period of time, I would choose air in favor of ocean transportation as it has greater potential of providing more value added service to Senco’s customers. What these services could potentially be having already being explained in some depth in my response to question 1.
5. | Total Cost ($) | Total Fixed Cost ($) | Total Variable Cost ($) | Variable Cost per Pound ($/POUND) | Ocean | 520,000 | 410,000 | 110,000 | 0.073333333 | Air | 486,000 |