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Aprons "R" Us Case

Hi there: Please only agree to do this question if you feel confident you can do it correctly! Please attach spreadsheets and other relevant information when completing the 4 problems so I can learn. Thank you!

Company Background

Aprons "R" US (ARU) is a third generation, family-owned company with annual sales of about $3 million. Is has a solid reputation for quality, building long-term personal relationships, and customer service. The company produces vinyl aprons (primary product) that eliminate cloth apron laundering costs for the supermarket industry in four countries. While ARU has six primary customers and offers a variety of products including rain coats, vinyls aprons, signage and corporate apparel, this case will be focused specifically on vinyl aprons for its largest customer, V-Mart.

Currently, V-Mart has a need for 36,000 aprons per month from ARU, but its ordering quality is lower than that because of the production bottleneck at ARU. ARU's management is considering increasing its production capacity to capture more of V-Mart's demand, but it is unsure where to invest. Moreover, ARU has investigated the option of outsourcing the whole production. They have already received a bid of $3.60 per apron from a reliable Chinese manufacturer. This figure includes all the costs (labor, material, shipping, etc).

(Please see the attached document for the complete case.)

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Solution Preview

1. The current production capacity of the ARU facility is 16896 aprons, or approximately 9.7 pallets. This is due to a bottle neck created in station 5.

2. The total cost per apron varies depending on whether the apron is hot stamped or silk screen. A hot stamp apron has a per unit cost of $2.87. A silk screen apron has a per unit cost of $2.95. Because V-Mart order 56% of their aprons that are hot stamped and 44% that are silk screen, the averaged weighted cost per apron is $2.92.

3. Based on this comparison, the outsourcing option is not attractive on several levels, which will be explored in the conclusion of this analysis.

4. The production ...

Solution Summary

This solution provides detailed answers for the four case questions. Two Word documents and two Excel files are included, one with the first half (questions 1 and 2) and one with the second half (questions 3 and 4).