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The Calhoun Textile Mill
-IRON MAN -
Process
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Solution
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Introducing an Index Explain if any fabric was sub-contracted
Two parameters: Time, Cost
Sub-contract does not consider timing.
Time consumed = Demand * Hrs./Yd.
Cost difference = Demand * (Sub. Cost – Mill Cost)
Index = Cost difference/Time consumed (dollar per hour)
Meaning: Added cost per hour for the sub-contracted
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Ranking of Index
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Experiment
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If anything other than fabric 1-4 was done by dobbie, why was dobbie used for it
Fabric 10 also produced by dobbie
Randomicity of excel
(fabric other than 1-4 and 6 could also be produced by dobbie)
Only factor of this model is cost
Sub-contracted only fabric 6, so the cost would be fixed.
The allocation of producing other fabric will not affect cost.
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Any other thoughts on this model
Quality standard on different fabric
Economic of scale
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Thank you
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