Free Man Bio Test Strategic Operations
Eastern Institute of Technology
Case Study
MGMT.7.04 Strategic Operations Management
Presented by Aswath Laxman Venugopal
For
Mr Ram Roy
Monday 3 May 2010
Table of Contents
Summary & Introduction 3
Section 2 6 If the current sales value of the FBXX product is 25 per cent of the company’s total sales of $100 million; and the average price is $1050/kg; then compute the following: 6 a. What is the annual sales volume? 6 b. What is the monthly sales volume? 6 c. What will be the monthly sales volume if FBT estimates its market to grow by 20 per cent in the next three or four years at current prices. 6
Section 3 6 Can FBT’s existing combined capacity support this 20 per cent market growth? What are the options? 6
Section 4 7 WHETHER FBT SHOULD INVEST IN A ‘BRAYFORD’ OR A ‘BI-LINE 8’ FACILITY? 7 COMPARE THESE TWO OPTIONS BASED ON TECHNICAL FACTORS, FINANCIAL COSTS, AND BENEFITS. 7 REPRESENT YOUR ANALYSIS WITH ‘COST-VOLUME-PROFIT (OR BENEFIT)’ CURVES (ALSO CALLED BREAK-EVEN ANALYSIS) FOR THESE TWO ALTERNATIVE CAPACITIES OPTIONS. FROM THIS DIAGRAM, SUGGEST THE OPTIONS FOR DIFFERENT RANGES OF PRODUCTION VOLUME. 9 What are the risks in each option? 11 Draw a decision tree to represent both the situations. You may assume suitable data (if needed) to complete this exercise. Finally suggest which option is the best for the Company? 12 How does the option selected affect the FBT’s operations in terms of flexibility, speed, and dependability? 12
References 14
Summary & Introduction
Freeman Biotest (FB) was one of the largest independent companies supplying the food processing industry. FB has been performing well and grown to a good position in the current market to generate total revenue over $100 million. Its initial success had come with a food preservative product, used mainly for meat-based products, and marketed under the name of ‘FBXX’. While FB had also developed other products subsequently in food colouring and food container coating fields, As FBXX
Case Study
MGMT.7.04 Strategic Operations Management
Presented by Aswath Laxman Venugopal
For
Mr Ram Roy
Monday 3 May 2010
Table of Contents
Summary & Introduction 3
Section 2 6 If the current sales value of the FBXX product is 25 per cent of the company’s total sales of $100 million; and the average price is $1050/kg; then compute the following: 6 a. What is the annual sales volume? 6 b. What is the monthly sales volume? 6 c. What will be the monthly sales volume if FBT estimates its market to grow by 20 per cent in the next three or four years at current prices. 6
Section 3 6 Can FBT’s existing combined capacity support this 20 per cent market growth? What are the options? 6
Section 4 7 WHETHER FBT SHOULD INVEST IN A ‘BRAYFORD’ OR A ‘BI-LINE 8’ FACILITY? 7 COMPARE THESE TWO OPTIONS BASED ON TECHNICAL FACTORS, FINANCIAL COSTS, AND BENEFITS. 7 REPRESENT YOUR ANALYSIS WITH ‘COST-VOLUME-PROFIT (OR BENEFIT)’ CURVES (ALSO CALLED BREAK-EVEN ANALYSIS) FOR THESE TWO ALTERNATIVE CAPACITIES OPTIONS. FROM THIS DIAGRAM, SUGGEST THE OPTIONS FOR DIFFERENT RANGES OF PRODUCTION VOLUME. 9 What are the risks in each option? 11 Draw a decision tree to represent both the situations. You may assume suitable data (if needed) to complete this exercise. Finally suggest which option is the best for the Company? 12 How does the option selected affect the FBT’s operations in terms of flexibility, speed, and dependability? 12
References 14
Summary & Introduction
Freeman Biotest (FB) was one of the largest independent companies supplying the food processing industry. FB has been performing well and grown to a good position in the current market to generate total revenue over $100 million. Its initial success had come with a food preservative product, used mainly for meat-based products, and marketed under the name of ‘FBXX’. While FB had also developed other products subsequently in food colouring and food container coating fields, As FBXX
References: Nigel Slack., & Michael Lewis. ( 2002, 2008). Operations Strategy (2nd Edition). Harlow: Financial Times Prentice Hall.