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Analysis of Danshui Plant No.2

In: Business and Management

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Introduction

Danshui was a contract manufacturer that assembled electronic products located in Southern China. Danshui has a contract to assemble 2.4 million iPhones within the period from 1st June 2010 to 31st May 2011 and their current production is only 180,000 units per month compared to planned production is 200,000 units. Danshui is using semiskilled labor for less than 1 dollar an hour and assembly line technique. Due to high demand of IPhone 4, Apple had contracted with Danshui to assemble iphones in Plant No. 2. A budget had been prepared soon after iPhone contract was signed. Therefore, Danshui plant manager, Wentao Chen was responsible to control all costs including materials, labor, overhead and shipping. IPhone 4 contained more than 100 components including flash memories, application processor, chip for phone calls, gyroscope and etc. Therefore, each worker will need to focus more than one task in a short period of time due to its assembly line toward completion. The assembly process entirely based on handwork by workers, where there are 140 steps in assembly process to be done by 325 individuals during 5 working days. The August Report had shown a loss of $672,000 although budget is $100,000, this is due to unable to produce 200,000 iPhone 4 units on demand. The major obstacle is not hiring enough qualified labor although wages was raised by 30% since July. Besides, flash memory installation also causing a trouble where they can be damaged by heat if not handled with care during installation. Hence, Samsung aware of this problem and raising the price of $2.00 for each unit.

Problem Statement and Analysis of Problem

Based on Case Danshui Plant No.2, the following 5 problems are discovered in the case:

Lack of information
Jianye Ma, the contoller, has submitted the report of August operations as requested by Wentao Chen, the manager.…...

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