【正文】 n’s products. They divide their costs into the following categories: labor, material and overhead. Overall costs have been increasing at a fairly hefty rate of 10% per year.q What is the current breakdown of costs along these categories for each product segment?Racing: Labor = 30%, Material = 40%, Overhead = 30%Mainstream: Labor = 25%, Material = 40%, Overhead = 35%Children’s: Labor = 25%, Material = 40%, Overhead = 35%q How has this mix of expenses changed over the past five years?In all segments, labor is an increasing percentage of the costs. q Does the basic approach to manufacturing (. the mix of labor and technology) reflect that of its petition?Your client tells you that there is a continuing movement to automate and utilize technology to improve efficiency throughout the industry, but it is his/her opinion that their approach, maintaining the “human touch”, is what differentiates them from the petition. (Unfortunately, he’s right!!)q Is the workforce unionized?Yesq What is the average age of the workforce?52 and climbing. There is very little turnover in the workforce.q What is the present throughput rating? How has it changed over the past five years?Presently the plant is producing at about 80% of capacity. This has been decreasing steadily over the last several years.q What is the typical reason for equipment shutdown?Emergency repairq Describe the preventive maintenance program in effect at the client’s facility?Preventive maintenance is performed informally based on the knowledge of senior technicians.q How often has equipment been replaced? Is this consistent with the original equipment manufacturer’s remendations?The client feels that most OEM remendations are very conservative. They have followed a philosophy of maximizing the life of their equipment and have generally doubled OEM remendations.The above information is sufficient to add some understanding to the cost side of the equation. Your client has an aging workforce and plant that is behind the times in terms of technology and innovation. This has contributed to excessive breakdowns, decreased throughput, increased labor rates (wages increase with seniority) and greater labor hours (overtime to fix broken machines).In proposing remendations to improve the client’s situation, there is no single correct approach. There are a number of approaches that might be explored and remended. The following are some possibilities:q Abandon the mainstream and children’s segment to recover leadership in the racing segmentIssues to consider in this approach:216。 How much of the racing segment is “recoverable”?216。 What are the expected growth rates of each segment?216。 How badly damaged is the relationship with the specialty outlets?216。 Are there alternative outlets to the specialty shops such as internet sales?216。 How will this move affect overall utilization of the operating facilities?q Maintain the mainstream and children’s segment, but sell under a different nameIssues to consider in this approach:216。 Is there demand among the mass and discount distributors for bicycles under their name?216。 What additional advertising and promotions costs might be incurred?216。 What are the expected growth rates of each segment?216。 What is driving the buying habits of the mainstream and children’s market?q Reduce costs through automation and innovationIssues to be considered:216。 What technological improvements are to be made?216。 What are the required investments? 216。 What are the expected returns on those investments?216。 How will these investments affect throughput?216。 To which lines are these investments appropriate? 216。 Are the mainstream and children’s segments potentially “overengineered”?216。 What impact will this have on the required workforce levels?216。 If layoffs are required to achieve the benefits, what impact will this have on labor relations?q Reduce costs through establishing a formal preventive maintenance programIssues to be considered:216。 What organizational changes will be required?216。 What analysis will be performed to determine the appropriate amount of PM?216。 What training is required of the workforce?216。 What technical or system changes are required?216。 How will the unionized workforce respond?Key takeaways:This case can prove to be lengthy and very involved. It is not expected that a candidate would cover all of the above topics, but rather work through selected topics in a logical fashion. It is important that the candidate pursue a solution that considers both revenue and cost issues to impact profit. Additionally, a conadidate’s ability to work fortably with the quantitative side of this case is important. The above remendations for improving profitability are just a few among many. The candidate may e with their own ideas. Firm: . KearneyCase Number:Case setup (facts offered by interviewer):q Your client is a . based manufacturer of branded cookies (cookies that carry the name of the manufacturer)q Recently private label cookies (those carrying the name of the retailer) have emerged and threatened branded cookies216。 Private label cookies emerged five years ago216。 Two and onehalf years ago they made up 10% of the overall cookie market (brand being the other 90%)216。 Today they make up approximately 20% of the overall cookie market (., there has been a steady, linear increase of private label portion of the overall cookie market during the past five years)216。 The overall cookie market has been relatively flat over the past five yearsq Private label cookies are made by the same manufacturers who make branded cookies, they are just sold under the name of the retailerq There are essentially three major petitors to consider:216。 Your client, who makes only branded cookies216。 A second major player, that makes both branded cookies and supplies cookies for priva