Individual Case study

Case I – Electro-Poly Corporation

The Electro-Poly Corporation is the world’s leading manufacturer of slip rings. A slip ring is an electrical coupling device that allows current to pass through a spinning or rotating connection—such as a gun turret on a ship, aircraft, or tank. The company recently received a $750,000 order for various quantities of three types of slip rings. Each slip ring requires a certain amount of time to wire and harness.

The following table summarizes the requirements for the three models of slip rings.

Unfortunately, Electro-Poly does not have enough wiring and harnessing capacity to fill the order by its due date. The company has only 10,000 hours of wiring capacity and 5,000 hours of harnessing capacity available to devote to this order. However, the company can subcontract any portion of this order to one of its competitors. The unit costs of producing each model in-house and buying the finished products from a competitor are summarized in the following table: