Maham Irfan

900888967

3rd March 2020

AIC Netbooks Case Study Solution

Introduction

The case study focuses on Advanced Integrated Circuitry (AIC), a corporation that

was established in the year 1992, based in Taiwan. It is known for being a producer of

printed circuit boards and at the same time focuses on graphic cards and

motherboards. AIC has had a competitive advantage of being a low-cost manufacturer

due to its focus on cost management. AIC plays an active role in innovating and

designing new generation of components and is considered an original design

manufacturer (ODM).

In the year 2001, AIC shifted all of its manufacturing to China in order to take

advantage of the low labor costs. Later in the year 2007, AIC decided to diversify its’

product line by including consumer electronics to initiate direct interaction with the

customers and expand its market share by developing its own line of branded

consumer electronics. Thus, AIC began the development of the QUIN netbook in the

year 2008 which consisted of the latest technology.

Problem Statement

As soon as the QUIN netbook was launched in the market, there was an evident

increase in the demand that required employees to increase their working shifts to 10-
12 hours. AIC netbooks was not willing to invest in recruiting and training new staff

due to the uncertainty of the product life and future demand levels.

AIC netbooks is currently facing a challenge of being unable to meet the

growing demand with its current operations. After they were faced with an

unexpected order of thousands of units, their production was not proving to be

efficient or effective. The growing demand has definitely made AIC netbooks

compromise on the quality that they were delivering initially by building a double

check in the assembly line process and introducing the Kaizen approach that focuses

on continuous improvement of processes. Instead of finding permanent solutions, they

are now looking for "quick fixes" to match with the current output levels. Thus, AIC

netbooks needs to decide whether to invest in a new assembly line or not.

Quantitative Analysis

The case study states that, the production level should match to 130,000 units in a

month. Currently, AIC netbooks consists of four assembly lines with 10 working

stations that are 16 meters in length. Each working station has two assigned floaters to

ensure quality levels. There are two working shifts of nine hours each with one-hour

lunch breaks. The total output level in one month with the current production capacity

with six working days in a week and 26 working days in a month are 119,808 units

and the requirement in the market that needs to be matched is 130,000 units. (Refer to

excel)

However, introducing a new assembly line, AIC will be able to produce more

units to meet the expected demand level without over-working the staff and

maintaining the quality and efficiency. The output in one month with an additional
assembly line would be 149,760 units, which exceeds the requirement of 130,000

units. (Refer to excel)

Qualitative Analysis

 Recommendation

As seen above in the quantitative analysis, the best decision for AIC would be to

invest in a new assembly line. AIC netbooks should invest in another assembly line if

the production is expected to rise in order to maintain their quality levels while

keeping up with the high output levels that are expected to secure its position in the

new market. Even though it is a long-term solution, it would benefit the corporation

by generating more income, increasing production over the next few months, and it

could also aid them in meeting the required market demand. The organization should

also implement the final resolution instead of the temporary repair. This will result in

the wastage of the employees’ time and energy, making AIC a more efficient

company and at the same time meeting the required demand level in the market.

Advantages and Disadvantages

If AIC netbooks decides to invest in a new assembly line, the plant

capacity will increase to meet the required adding any additional working

hours or extra shifts for the employees. The firm will also be able to

produce more units in lesser time.

However, implementing the new assembly line will result in increasing

the variable costs as well as the fixed costs of installing the new assembly

line. Investment will also be required for recruiting and training new staff.
 Limitations

AIC has newly developed its own line of branded consumer electronics; it

might not yet have sufficient funds to allocate specifically to the new

assembly line. Another possibility is that the QUIN netbook may not last

in the market for a long period of time due specifications advancement of

technology.

Last but not the least, hiring new workers and training them would be

time consuming and may not be beneficial. The potential workers might

not be completely trained during the period of increased productivity

requirement and thus, will not be capable enough to aid in production to

meet required demand levels.

 Conclusion

AIC needs carefully analyze the impact of its decision, considering the

limitations concerning the implementation of a new assembly line. In case

AIC does not have the required funds or time to invest in the development of

the new assembly line and chooses not to do so, other alternatives could be

either eliminating the weekends and making all seven days working days or

adding an additional worker or floater in each of the existing assembly which

would reduce cycle time.

 References

 Wu, S. (n.d.). Secrets From a Factory Assembly Line. Retrieved March 5,

2020, from

https://www.fictiv.com/hwg/assemble/secrets-from-a-factory-assembly-

line

 Wheelwright, S. C. (n.d.). AIC Netbooks Optimizing Product Assembly.

Retrieved March 5, 2020, from

https://www.caseprofessors.com/aic-netbooks-optimizing-product-

assembly-484.html

 Yong, S. (2011, January). AIC Netbooks: Optimizing Product Assembly.

Retrieved March5, 2020, from

 https://www.hbs.edu/faculty/Pages/item.aspx?num=41778

 Hamel, G. (n.d.). Pros & Cons of Manufacturing Products With Assembly

Lines. Retrieved March 8, 2020, from https://smallbusiness.chron.com/pros-

cons-manufacturing-products-assembly-lines-40809.html