Alicia Wong case study

Alicia Wong Case

Making the mustard in-house does make since financially. In fact, it could be made in house for half the cost.

Current Situation Cost:

Mustard: .32/liter

Freight: .04/liter

Overall Cost: .40/liter or $40,000 each month.

Mustard in-House Cost:

Mustard Ingredients: .0906/liter

Additional Labor: .105/liter

Overall Cost: .1956/liter or $19,560 each month.

This equals a savings for company of $20,440 each month.

While the savings for this approach appear optimal, there are other alternatives that can be sought. The company can explore other mustard vendors and determine if any offer the mustard at a lower cost.

There is still some information missing in order to conduct a proper analysis for the proposal. First, it is necessary to determine the actual increase in labor for the overhaul. This would need to include training of employees on new procedures. Additionally, this change may affect the taste of the products being produced. In order to ensure this does not happen, it may be necessary to hire more quality control analysts to prefect an adequate mustard recipe for the products. I would also conduct the research into alternative mustard suppliers for referencing in the final report.

When making the proposal to the CEO, I would address the cost difference, the improvements in labor, quality control's concerns, and the overall impact of the change on operations.

When addressing the difference in cost, I would create a spreadsheet presenting the information and comparing all costs side-by-side. I would also create charts for additional scenarios of finding different vendors and again show which final decision is the most advantageous financially.

When addressing the improvements to labor, I would argue the advantages of using lighter weight bags of spice mix as opposed to the bulky drums the company is currently using. I would mention the enthusiasm of the employees in support of the idea. I would also create a report detailing how each ingredient will be added to the blends and analyze the full time efficiency breakdown. This final point is important given the factory's state of the art and top efficiency manufacturing machines. I would finally point out how this would keep workers on the line during the full production instead of requiring them to leave the line and rinse out the otherwise useless empty drums.