Krause Corporation case study

Krause Corporation Case study

Introduction

In order to analyze the effectiveness of production of new product, in the situation where there are other lines of product manager has to assess a part of fixed costs which is involved in the production process, the market, competition, product segmentation, production process, marketing strategy and marketing, product design, and all costs associated with production, marketing, logistics and storage, etc are analyze to see the capacity, demand, selling price of the product in relation to other products in the same segment of the competition.

In this paper, we will advice Steve Rothel a supply manager for the Midwest division of the Krause Corporation to manufacture the pipe or purchasing the pipe from an outside source.

Discussion

It is recommended to the Steve Rothel to go for outsourcing as the cost associated with manufacturing the product is more than outsourcing. Moreover, Outsourcing is a key strategic resource to improve the overall performance of companies through partnerships with outside companies (www.ueanet.com).

In particular, an opportunity for development, because the consolidation process that take place in many areas, require more and more to the directions towards Human Resources of national and multinational groups to have consistent and coherent tools that integrate the management and provide relevant information useful for decision. Krause Corporation can implement different types of outsourcing. But for Krause Corporation, full outsourcing would be cost benefit (Don, Maryanne & Guan, 2007).

Cost Associated With Outsourcing

If Krause Corporation goes for outsourcing the pipe the following per pipe cost will be incurred:

Purchase option

 

10 Inch Diameter

23 per linear foot

230

28 per linear foot

280

 

 

supplier provided

 

20-foot sections

$362

Whereas, if Krause Corporation manufacture pipe the following cost will be incurred along with the extra human resource.

Manufacturing

Stainless steel sheets

10 feet

36-inch

$648

48-inch

864

60-inch

1080

 

 

Welding wire cost 36-inch

187.2

48-inch

187.2

60-inch

187.2

 

 

Welding wire cost 36-inch

10.8

48-inch

14.4

60-inch

18

 

 

Welding gas cost 36-inch

1296

48-inch

1728

60-inch

2160

Risk Associated With Manufacturing the Pipe

Failure ...