Green University of Bangladesh

Dept. of Computer Science &Engineering

Course Code: GED-403

Course Title: Industrial and Operational Management
Date of Submission: 04/09/2021

Assignment For Continuous Assessment

Submitted By: Submitted To:

Name: Bithy Roy Name: Showkat Ara
Id: 182002004 Khanam
Section: DA Assistant Professor ,
Dept. of CSE Dept. of Green Business
Green University Of School
Bangladesh Green University Of
Bangladesh

Remarks:
Question 1(part A): Supposed you want to expand your existing
company by opening a new division in a foreign country. What
strategies might you employ before making your decisions?
Answer to the question No: 1(a)

If I want to expand our existing company by opening a new

division in a foreign country, "Dominant factors in manufacturing"
strategies might employ before making my decisions.

The factors Dominate the decision of the location of new manufacturing

plants can be broadly classified into groups. They are given below:

Favorable labor climate : In labor intensive industries such as

textiles, furniture, and consumer electronics favorable labor climate may
be the most important factor.

Proximity to markets: It is important to be close to the market if the

rate of outbound transport is high.

Impact on Environment: Impact on the environment As the focus on

sustainability grows, organizations are looking to identify the impact of
environmental location decisions.

Quality of life: Quality of life is an issue that takes into account the
availability of good schools, recreational facilities, cultural events and
an interesting lifestyle.

Proximity to suppliers and resources : Proximity to suppliers and

resources is important when the cost of internal transportation is high.

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Proximity to the parent company’s facilities: If coordination and
communication are critical, then Proximity to the parent company's
facilities are important.

Utilities, taxes, and real estate costs: Other important issues that may
arise include utility costs (telephone, energy and water), local and state
taxes , Financial incentives, transfer costs and land costs provided by the
local or state government.

Other factors: Other factors influencing location decisions include

space for expansion, construction costs, accessibility to multiple modes
of transportation, cost of replacing materials between people and plants,
insurance costs, competition from other organizations for workers, local
regulations, community attitudes and more.

Question 1(part B): Explain why locating a plant solely on the basis
of low labor costs may be the wrong approach?

Answer to the question No: 1(B)

In addition to labor costs, there are other factors from which conclusions
can be drawn. For example, if an organization is going to start their
business in another country, they should not look only at the low labor
cost. Whether labor is efficient or not should also be considered as a
factor. It is important to have low cost labor and skilled labors.
In addition to this, another factor is the political environment of the
country. It remains to be seen whether the country is at war or has
political instability. If there is political instability somewhere, it would
not be right to take businesses there even if there are low labor costs and
skilled workers.

Type equation here.3

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 Question 2(a): A company that produces pleasure boats has decided to
expand one of its lines . Current facilities are insufficient to handle the
increased workload, so the company is considering three alternatives, A
(new location), B (subcontract), and C (expand existing facilities).
Alternative A would involve substantial fixed costs but relatively low
variable costs: fixed costs would be $250,000 per year, and variable
costs would be $500 per boat. Subcontracting would involve a cost per
boat of $2,500, and expansion would require an annual fixed cost of
$50,000 and a variable cost of $1,000 per boat.
a. Which alternative would yield the lowest total cost for an expected
annual volume of 150 boats?

Answer to the question No: 2(a)

Alternative A (New location):

Variable Cost Total Cost

Fixed Cost (Cost per Unit) (No. of (Fixed Cost +
Boats) Variable Cost)
$250,000 $500(150) = $75,000 $325,000

Alternative B (Subcontract):

Variable Cost Total Cost

Fixed Cost (Cost per Unit) (No. of (Fixed Cost +
Boats) Variable Cost)
$0 $2500(150) = $375,000 $375,000

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 Alternative C (Expand existing facilities):

Variable Cost Total Cost

Fixed Cost (Cost per Unit) (No. of (Fixed Cost +
Boats) Variable Cost)
$50,000 $1000(150) = $150,000 $200,000

Based on above calculation , Alternative C is expanding the existing

facilities that would yield the lowest total cost for an expected annual
volume of 150 boats.
Question 2(b): What other factors might be considered in choosing
between expansion and subcontracting?

Answer to the question No: 2(b)

Usually, expansion indicates expanding the Remaining substances or

other things in the factory and subcontracting
indicates concatenation with the other factories those who have
sufficient producing abilities.
Other factors that might be considered when deciding between the
expansion and subcontracting alternatives include subcontracting
costs will be known with greater certainty, subcontracting provides a
secondary (backup) source of supply, and expansion offers more
control over operations.

End

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