Automation reduces per unit labor costs but it has two disadvantages. what are these?
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5. Automation reduces per unit labor costs but it has two disadvantages. What are these?
Answer -
1.It increases the length of R&D projects on the product-line, thus making re-positioning more
difficult;
2.Separation costs are incurred as a result of the requirement for fewer workers.
6. A product’s margin is determined by subtracting its manufacturing costs (labor and material) from its
price. Logically, higher prices and lower labor and material costs result in higher margins. Keeping in mind
the Customer Buying Criteria, how would you increase margins for a Low End product?
Answer - Automation increases & MTBF reduction.
How would you increase margins for a High End product? Answer - Raise price, reduce MTBF
Hint: The criteria can be found in the Capstone Courier Market Segment Analyses.
7. The Consumer Report indicates how customers perceive your product offerings. For example, Reliability
(MTBF) is very important to Performance customers. What is the current MTBF for your Performance
product?
Answer - 25000
Given the desired range for Performance customers (found in the Buying Criteria) how many hours would it
need to be raised to receive an “A” on the Consumer Report?
Answer - 25335
Answer -
1.It increases the length of R&D projects on the product-line, thus making re-positioning more
difficult;
2.Separation costs are incurred as a result of the requirement for fewer workers.
6. A product’s margin is determined by subtracting its manufacturing costs (labor and material) from its
price. Logically, higher prices and lower labor and material costs result in higher margins. Keeping in mind
the Customer Buying Criteria, how would you increase margins for a Low End product?
Answer - Automation increases & MTBF reduction.
How would you increase margins for a High End product? Answer - Raise price, reduce MTBF
Hint: The criteria can be found in the Capstone Courier Market Segment Analyses.
7. The Consumer Report indicates how customers perceive your product offerings. For example, Reliability
(MTBF) is very important to Performance customers. What is the current MTBF for your Performance
product?
Answer - 25000
Given the desired range for Performance customers (found in the Buying Criteria) how many hours would it
need to be raised to receive an “A” on the Consumer Report?
Answer - 25335
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