Milanie s Dilemma Q1. In the role of Melanie, prepare the best case to support Chris s position?

Chris is the plant manager for the manufacturing of all the transformers. He is of the view that that purchasing robots for welding continuous seams on the transformer is not a good idea. According to him, the costs for robots is not justified. He is correct according to his view as he is not an technical person and so doesn t feel the need of implementing new technology. Also, being a manager he is concerned about his welding workers who will have to leave their jobs due to robots and thus threaten the labor unions. The staff is also not trained well to make proper use of robots. Q2. Prepare the best case to support Nat s case? Nat is the director of engineering and so is keen in bringing robots to the manufacturing plant so as to make the work of welding easier and more efficient. Also, the overall quality of the welding department will improve and expenses will reduce. He wants his engineering staff to get advanced with changing technology as they would learn robotics skills. Q3. With three weeks remaining , what additional information would you gather? Why? Melanie, the vice president s staff assistant is in dilemma as to whether the robots should be purchased or not. She has to do overall analysis to see which decision would be profitable for the business in terms of the expenses and human capital retention. So, information should be gathered such that neither the labor is disappointed nor the business face loses. The following information can be gathered:y y y y y y y The willingness of the union to participate in the change. The number of welding labors, who will have to leave the job. The amount of compensation that will be given to workers who will be fired. Comparison of the last year sales with the present year s sale if robots implemented. The cost benefit analysis as to which choice lead to overall value addition of the firm. Salaries paid to the welding workers. No of hours the workers work.

Q4. If you were asked for a recommendation, without additional information , what would you suggest. Why? We make few assumptions before making calculations: y y y Equal salaries are paid to direct labor, non direct labor and direct labor welding. The useful life of workers is 5 years. The material usage variance is not considered.

The overall calculations are done as follows to see cost benefit analysis:-

But care should be taken that interests of workers are not hurt as workers are the asset of the organization. But then the efficiency would be very high and in the long run the sales and profitability would go up.5 Direct labor welding = 121 Total cost of direct labor welding = Cost of one labor * Direct labor welding = 4130.Total cost when labors work y y y y y Cost of labor Total labors Cost of one labor = 4750000 = 1150 = Cost of labor / Total labors =4130. I would suggest that robots should be implemented especially if the operations shift to Philippines as the labor wages and fringes also reduce a lot there. y y y y y y y y . So considering this.5 * 121 =499790.5 Total cost of robots Direct workers replaced due to robots = 3 No of robots required = direct labor welding/ workers replaced = 121/3 =40 Cost of one robot =103000 Total cost of 40 robots = 103000 *40 =4120000 Total cost operations annually = 10300 Total cost of operating robots = 4120000 + 10300 =4130300 Hence can be concluded that the robots would cost more as compared to direct labors initially.

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