Contract manufacturer Essay

Executive SummaryDanshui Plant No. 2 in southern mainland China is a contract manufacturer that assembles electronic products and has a one-year contract with apple Inc. to assemble 2.4 million iPhones. Monthly production target for DC is 200,000 units unless in the first three months of the contract, the plant is unable to assemble as many phones as expected and is operating at a loss. Wentao Chen, manager of Danshui was glowing on reviewing the monthly operations performance of august as in the third month of the contract, production was only 180,000 units. The plant has had difficulty hiring seemly workers despite raising wages over 30%.Issues1. Assembly process for an iPhone is complicated.2. Danshui has underproduction.3. There is a lack of qualified labor.4. stingy information to train their workers.5. Insufficient experience to manage operations.Requirements1. The plant manager considers whether a flexible budget would be more useful for uncovering problems than the stati c budget currently universe used. 2. Need to perform breakeven and flexible budget analyses and calculate wrong and usage variances as they consider solutions for the plants problems with the iPhone contract. 3. What should be the total expected comprise per unit if all manufacturing and shipping overhead (both variable and fixed) were allocated to planned production? What was the actual cost per unit of production and shipping?4. To suggest as to how Apple iPhone 4s would have been have to have been completed for Danshui Plant No.2 to break. 5. What are some strategies or decisions that Wentao Chen should consider in trying to purpose the problems with the Apple iPhone 4 contract in the next nine months, how these would change the costs and profitability of Danshui Plant No.2 and the iPhone 4 contract.HypothesisIt is expected that the contract price should be raised in order to be profitable as variances observed in the analysis suggest cost overruns andlack of production disc ourse & control mend damages are also observed in material handling. Thus DC is expected to cover efficiency of its production while reducing loss / damages to materials.Suggestions and recommendations1. The most cost effective way to boost up production level under same capacity.2. Motivate employees morale and concern their welfare.3. Achieve learning curve effect under well-organized OT plan.4. Mix balance strategy is advised Over time schedule plan summation pay for performance policy.Alternative Strategies1. Over time schedule plan2. Cellular manufacturing3. increase wages4. pay for performance policy5. Outsourcing