Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Near Net Casting Solutions, Inc. (NNCS) produces castings for the automotive industry, specifically engine blocks and transmission housings. The parts are not necessarily complex

image text in transcribed

Near Net Casting Solutions, Inc. (NNCS) produces castings for the automotive industry, specifically engine blocks and transmission housings. The parts are not necessarily complex but NNCS' process yields a 70% loss from parts that contain unacceptable "voids" in the raw castings. To resolve this issue, NNCS produces more parts than what are necessary and absorbs the labor costs into their pricing. Defective materials are melted back down and included in the next batches worth of raw materials. Through studies, NNCS has found that the void issues are resulting in triple the costs for labor and energy. Because they reuse the rejected parts as a remelt in their batches, they save materials costs but believe this a leading cause of contamination in their process. They do inspect the casted parts prior to machining and believe that their costs would be much higher than the projected $300,000 the defective casting are currently costing them. The costs are high enough that NNCS management is looking at a series of proposed solutions. * 2. Engineering could look at the current design and validate that material flows in the molds are correct. The anticipated costs are $150,000 in research hours, $50,000 in testing, and $25,000 in materials. Engineering anticipates that they would complete their work and have a solution at the end of the next year (t = 1). This would reduce the projected costs from the defective casting to $15,000. Engineering is also working on other projects and believe that there is a 90% likelihood of the costs holding true while there is a 10% chance that their total costs for the project will reach $275,000. They are also predicting that there is a 50% likelihood of finishing in 9 months, a 40% likelihood of finishing in 1 year, and a 10% likelihood of finishing in 15 months. *3. Engineering could outsource the work to a third-party vendor. The quote was for $350,000 with deliverables at the end of the next year (t = 1) and would reduce the projected costs from the defective casting to $15,000. The company has worked with this vendor and knows that there is a possibility for scope creep that will affect the costs and the time until delivery. They rate the quoted costs at 80% likelihood of happening with a 20% chance that the costs inflate to $380,000. They predict that the delivery in one year has a 50% likelihood of occurring, that 18 months has a 40% likelihood, and that 24 months has a 10% likelihood of occurring. al

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Operations Management Creating Value Along the Supply Chain

Authors: Roberta S. Russell, Bernard W. Taylor

7th Edition

9781118139523, 0470525908, 1118139526, 978-0470525906

More Books

Students also viewed these General Management questions

Question

Define Management by exception

Answered: 1 week ago

Question

Explain the importance of staffing in business organisations

Answered: 1 week ago

Question

What are the types of forms of communication ?

Answered: 1 week ago

Question

Examine the IQR for each region. Which is greater?

Answered: 1 week ago