Costs of Production at San Juan Cell Phones

Costs of toil at San Juan mobile phone Phones This is clearly a challenge for Lisa. If Lisa decides to take the order she entrust withdraw the opportunity to offer the manufacturing plant to capacity over the next three months and fulfill a Company Value by redeeming employees working, in addition, she entrust have a bonus check on her pocket. This will be the optimum decision if the factory had excess capacity of 100,000 and Big Box intercommunicate price remains $20 per unit.Lets say Lisa decides to mapping the of import Model Line to make the additional 30,000 units, since we are of a sudden on information lets assume that because of the production delineate change the factory will be 30,000 short on Beta Models. Based on table 1 (Unit Profitability Report) and if units are sell accordingly and so San Juan Cell Phones will generate a internet of $90,000 by manufacturing and merchandising the Alpha model vs. 240,000 profit generated by manufacturing and selling the Beta model. San Juan Cell Phones will risk $150,000 in profit with the production line change alternative. If the alliance decides to honor the asking price then San Juan Cell Phones will generate losses. If phones are sold at $15 each and variable cost per unit remains same ground on table 1 (Unit Profitability Report) then the union will lose $2 per unit making it a $200,000 or a $140,000 deficit.Variable cost will have to decrease $2+ in order to gain some profit. An some other alternative will be to hire the OEM to make up the entire order. This alternative will be the most profitable one with a $100,000 profit gain without literary doing anything. Mrs. Norman needs to realize that gains may not be always in the shape of money and that she needs to comply with company values in order to maintain integrity which is very important in chore today.It is clear that a mount with a major chain akin Big Box will down a good advertizement for the company which eventually will br ing more buyers and that will bring more profit to the company, so no matter what happens the company will benefit from this order if production is handled correctly. Keeping that in mind, ordering the OEM to manufacture the entire order is the most attractive option in hurt of money but will not run the factory at capacity and will not keep the employees working which is one of the companys values.In my opinion there is a happy forte to the situation that could bring some profit will keep the employees working and will comply with the order in time. Dividing the production between San Juan Cell Phones and the OEM will fulfilled most of Mrs. Norman needs. Buy hiring the OEM to manufacture 2/3 of the order will make it even with profit of the OEM deal paying for the losses made by producing the Alpha models within the companys facility and selling it at the requested price ($14).Since net were good and cost control met standards this will be an alternative to Lisa because producti on will increase 33,334 units decreasing the excess capacity to 36,667. In other words factory will be producing closer to its capacity, will keep employees working and will provide the costumers a quality product on time. If Lisa wants to gain profit from the deal then she needs to decide how many another(prenominal) more units the OEM needs to manufacture with little impact on factory productivity, employment and of course her bonus.