Running Head: CLEARHEAR SCENARIO
ClearHear Scenario: An Opportunity Cost Analysis
University of Phoenix
Kendra Sherman works as a business development specialist for ClearHear, a cell phone manufacturer. Big Box has placed an order for 100,000 cell phones and Kendra wants to fill the customers order, but is faced with a dilemma because the current volume ClearHear has is access to 70,000 cell phones in the price range Big Box is willing to pay.
a.) Identify alternative solutions to meet the end-state goals
End state goals define what is important about what is to be achieved and have a fundamental effect on the business's goals. They are sometimes identified through the vision and mission for the company. The end-state goals for ClearHear are to provide their customers with products on time and that reliably meets or exceeds their expectations. ClearHear would additionally like to keep the ...view middle of the document...
An additional alternative would be to have the original equipment manufacturer (OEM) produce the remaining 30,000 phones needed to complete the order for Big Box. The OEM can produce the phones at $14 each and ClearHear could sell them for profit of $1. The two alternatives that appear to have the best outcomes lie between shifting the 30,000 units production capacity assigned to the Beta model OR the (OEM) to supply the rest in order to complete the Big Box order. Or the whole 100,000 Alpha can be from the OEM.
b.) Analyze and evaluate the alternatives that you identified
Scenario 1: Accept Big Box order, move all Beta production to Alpha and buy 100,000 Alpha units from the OEM
Scenario 2: Accept Big Box order, continue Beta production and buy 100,000 Alpha from the OEM
c.) Perform risk analysis to identify potential risks and negative consequences of the alternative solutions
Using the calculations it appears the better choice out of the available options is to continue with Beta production and then source 100,000 Alpha from the OEM, which will then be distributed as 30,000 to Big Box, and 70,000 Alpha. Reviewing ClearHear’s statement of values, there are risks and negative consequences associated. The quality of work is a doubt if the total 100,000 Big Box order is to be produced by two entities – ClearHear for 70,000 unites and OEM for 30,000. Apart from that, the chosen method would keep ClearHear in good standing with the customer since the OEM product meets factory standards and they would receive the full order at one time. This alternative would keep the resources free at ClearHear so that they could continue to produce the Beta phone, which does produce the higher profit.
d.) Make a recommendation of the best alternative solution and explain how it best meets the desired end state
The recommendation is to accept the order, reallocate the 30,000 units production capacity allocated to Beta, which means that Beta production will be stopped temporarily until the Big Box order is fulfilled, and then source 100,000 Alpha from the OEM. Overall this recommendation might leader to higher possibilities of improved and quality production and profitability of the company.