Genesis Computers assembles and sells inexpensive laptop computers from industry standard parts which are generally purchased...

  
 

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Genesis Computers assembles and sells inexpensive laptop computers from industry standard parts which are generally purchased from the lowest bidder. Its strategy is to avoid direct competition with major producers such as Dell and Hewlett-Packard by targeting its product at budget-conscious individual consumers and small businesses. Genesis Computers also promotes and sells its products only through the Web in order to keep marketing costs low and to avoid head-to-head competition with major retail outlets such as Fry's and Best Buy. As a result, most of its sales are made one unit at a time. A laptop is not assembled until after the order is received in order to minimize inventory and obsolescence cost. Each completed laptop is then shipped by UPS from the assembly plant directly to the customer. Genesis Computers currently operates four assembly plants, all of which are located in the Southern U.S. and Mexico because of relatively low labor costs. Genesis Computers has built its reputation on shipping all orders in a week or less. So, if the company does not have enough overall internal capacity to fulfill an order in any given week, it will subcontract out the assembly task to a small electronics company near Asheville. On short notice the subcontractor picks up parts at the Ashville plant and then transports the assembled computers back to the Ashville plant for shipment to the customer. The short notice requirement expected of the subcontractor makes this option very expensive at $185 per computer. This cost can be treated as the subcontractor's labor charge for analysis purposes; however, it also covers his overhead, cost of picking up parts and delivering assembled computers to the Ashville plant. It also covers his profit margin. But it does not include the cost of the parts or the shipping cost to the customer, both of which are paid for by Genesis Computers. The company uses the subcontractor even though it loses money on every laptop they assemble because it knows its reputation will be damaged if it cannot fulfill all customer orders on a timely basis. The four plants and the subcontractor with their average operating costs and capacities are as follows. The subcontractor capacity is whatever is necessary to meet demand. Assembly labor cost Fixed cost Parts cost, $/unit (including inbound transportation cost) 375 Сарасity units/week S/week $/unit Asheville, NC Meridian, MS Round Rock, TX Guadalajara, Mexico 17 125,000 60,000 240,000 120,000 1,500 1,000 2,500 2,000 14 360 18 350 10 320 Subcontractor 185 375 For marketing and accounting purposes, the company has divided the U.S. market into six geographic regions. These regions along with their average selling prices and forecasted weekly demand levels are as follows: Selling price $/unit 550 Demand units/week North East (NE) South East (SE) North Central (NC) South Central (SC) North West (NW) South West (SW) 1,200 1,100 1,400 1,000 1,300 1,500 450 500 525 475 500 Average UPS shipping costs, in dollars per unit, from any of the assembly plants (and the subcontractor) to any market area are as shown below. The shipping costs are included "free" to the customer. From/To NE SE NC SC NW SW Asheville 17 11 18 16 23 21 Meridian Round Rock Guadalajara Subcontractor 18 12 19 15 21 20 20 18 19 13 22 17 32 30 33 25 31 24 17 11 18 16 23 21 1. Copy the three tables, above, into an Excel worksheet. This document is available on Blackboard. On the same worksheet create a table like the one below to compute contribution per laptop from each plant and the subcontractor to each market area. NE SE NC SC NW SW Asheville Sales Labor cost Parts cost Transportation Contribution Meridian Sales Labor cost Parts cost Transportation Contribution Round Rock Sales Labor cost Parts cost Transportation Contribution Guadalajara Sales Labor cost Parts cost Transportation Contribution Subcontractor Sales Labor cost Parts cost Transportation Contribution Genesis Computers assembles and sells inexpensive laptop computers from industry standard parts which are generally purchased from the lowest bidder. Its strategy is to avoid direct competition with major producers such as Dell and Hewlett-Packard by targeting its product at budget-conscious individual consumers and small businesses. Genesis Computers also promotes and sells its products only through the Web in order to keep marketing costs low and to avoid head-to-head competition with major retail outlets such as Fry's and Best Buy. As a result, most of its sales are made one unit at a time. A laptop is not assembled until after the order is received in order to minimize inventory and obsolescence cost. Each completed laptop is then shipped by UPS from the assembly plant directly to the customer. Genesis Computers currently operates four assembly plants, all of which are located in the Southern U.S. and Mexico because of relatively low labor costs. Genesis Computers has built its reputation on shipping all orders in a week or less. So, if the company does not have enough overall internal capacity to fulfill an order in any given week, it will subcontract out the assembly task to a small electronics company near Asheville. On short notice the subcontractor picks up parts at the Ashville plant and then transports the assembled computers back to the Ashville plant for shipment to the customer. The short notice requirement expected of the subcontractor makes this option very expensive at $185 per computer. This cost can be treated as the subcontractor's labor charge for analysis purposes; however, it also covers his overhead, cost of picking up parts and delivering assembled computers to the Ashville plant. It also covers his profit margin. But it does not include the cost of the parts or the shipping cost to the customer, both of which are paid for by Genesis Computers. The company uses the subcontractor even though it loses money on every laptop they assemble because it knows its reputation will be damaged if it cannot fulfill all customer orders on a timely basis. The four plants and the subcontractor with their average operating costs and capacities are as follows. The subcontractor capacity is whatever is necessary to meet demand. Assembly labor cost Fixed cost Parts cost, $/unit (including inbound transportation cost) 375 Сарасity units/week S/week $/unit Asheville, NC Meridian, MS Round Rock, TX Guadalajara, Mexico 17 125,000 60,000 240,000 120,000 1,500 1,000 2,500 2,000 14 360 18 350 10 320 Subcontractor 185 375 For marketing and accounting purposes, the company has divided the U.S. market into six geographic regions. These regions along with their average selling prices and forecasted weekly demand levels are as follows: Selling price $/unit 550 Demand units/week North East (NE) South East (SE) North Central (NC) South Central (SC) North West (NW) South West (SW) 1,200 1,100 1,400 1,000 1,300 1,500 450 500 525 475 500 Average UPS shipping costs, in dollars per unit, from any of the assembly plants (and the subcontractor) to any market area are as shown below. The shipping costs are included "free" to the customer. From/To NE SE NC SC NW SW Asheville 17 11 18 16 23 21 Meridian Round Rock Guadalajara Subcontractor 18 12 19 15 21 20 20 18 19 13 22 17 32 30 33 25 31 24 17 11 18 16 23 21 1. Copy the three tables, above, into an Excel worksheet. This document is available on Blackboard. On the same worksheet create a table like the one below to compute contribution per laptop from each plant and the subcontractor to each market area. NE SE NC SC NW SW Asheville Sales Labor cost Parts cost Transportation Contribution Meridian Sales Labor cost Parts cost Transportation Contribution Round Rock Sales Labor cost Parts cost Transportation Contribution Guadalajara Sales Labor cost Parts cost Transportation Contribution Subcontractor Sales Labor cost Parts cost Transportation Contribution

Answer rating: 100% (QA)

Asheville 1ParticularsNESENCSCNWSW Sales 660000495000700000525000617500750000 Less Labor cost204001870023800170002210025500 Parts cost450000412500525000375000487500562500 Transportation204001210025200... View the full answer