Problem $2-5($Static$)$

$20$

points

$00$:$46$:$01$ eBook

References

Noble Bicycles of Glen Arbor, Michigan, is a small batch manufacturer of high$-$end bicycles. That is$,$ it typically builds bicycles in batches of one to three units. Quality is high, only to be expected when the typical bicycle frame costs $$2,500$ and up$.$ Yet, profits have not kept pace with top management's expectations. Management has set a goal of generating a minimum of $25$ percent return on assets. As a result of a corporate SWOT analysis, management has identified one critical threat: the costs at Noble are simply too high $-$and one important opportunity: because of the flexibility of operations and the experience of the design team, many of whom are either professional or serious amateur bicyclists, Noble is well positioned to become an innovation leader. A top management team consisting of the marketing director, the finance director, the corporate vice president, the purchasing director, and the director of operations management has developed two alternative strategies:

Focus on reducing costs through the application of lean systems and procedures.

Focus on product innovation.

To assess the two approaches, the team has generated the following table. Use Figure $2\mathrm{.}3.$

$\backslash$table$[[,$Current Values,Lean Proposal,Innovation Proposal$],[$Sales Category,$$12,500,000,$$$12,500,000,$$$16,000,000$