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Case Study Rochem Ltd

In: Business and Management

Submitted By sakis335
Words 451
Pages 2
Questions:
1 How do the two alternative process technologies (Chemling and AFU) differ in terms of their scale and automation? What are the implications of this for Rochem?
2 Remind yourself of the distinction between feasibility, acceptability and vulnerability discussed in Chapter 4. Evaluate both technologies using these criteria.
3 What would you recommend the company should do?

1.
The differences of Chemling and AFU in terms of scale are tabulated below:

Machines Chemling AFU
Variable Cost per unit £750 £600
No. of Units per month 105 kg 140 kg
Capacity 98% 99.50%
No. of units based on the capacity
(No. of Units per month+ Capacity) 102.9 138.6
Total Variable Cost
(Variable Cost per unit* No. of units based on the capacity) 77175 83160
Fixed Cost £15,000 £40,000
Total Cost per month
(Total Variable Cost +Fixed Cost) 92175 123160
Total Cost per unit
(Total Cost per month/ No. of units based on the capacity) 895.77 888.60

895.77-888.60= 7.17
So, the Chemling’s machine total cost per unit is by £7.17 higher.

2.
Evaluating the two alternative technologies according to their features and the long term valuation, the new Chemling is manual testing unlike AFU that is automatically testing. Also, the delivery for the AFU is immediate and tree months for the Chemling. So the AFU is more feasible.
The AFU technology is how all future similar technologies will be. By the acceptability of the technology the company will improve the competitiveness and will give a return on investment as well as adding to the resource base.
In the end, any manufacturing operation has to bear in mind that, the unit cost of the product is a critical factor in measuring performance. In the case of the Rochem Ltd, the Chemling’s machine total cost per unit is by £7.17 higher. So, as a long term investment the AFU is more profitable.

3.
The…...

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