G. G. Toys: Example #2
G. G. Toys and games was a doll manufacturer facing problems with efficiency and success. The company discovered a successful product within their Geoffrey toy and Niche branded doll #106. Stores could customise to the requirements and buying practices of their consumer bottom. On average, the Geoffrey Girl doll cost $19. 19 to produce, and the #106 doll $23. 74.
To access within a study of their overhead expense for both of their crops, research confirmed that: 1 . A setup was performed in the Chi town facility every time a modification for the dolls was performed. Additionally , every time a specialty-branded girl doll was developed, a separate setup was instructed to process the raw materials for the required specs. 2 . Staff in the Chicago, il facility generally operated a number of machines together once they had been set up. Therefore, machine-related expenditures might associate more towards the machine several hours of a product than to its production-run labor hours.
Because every retailer necessary slight adjustments to the Geoffrey doll's overall look, a new create and development run was required for each design transform. Retailers had been found being conservative within their ordering patterns, ordering fewer units more often. Thus raising the number of setups required, triggering increased labor and material cost.
The research done by the external group would show the of opportunity. Because setup is time intensive, labor intensive, and costly, it could be within cause (at least with the information provided inside the article) to offset several of this cost and put any additional setup cost back around the responsibility of the customer/ store requesting the modifications.
If system cost were put back around the retailer debit could become a profitable gain on a per product basis.
Cost (labor+ material)
Profit (per unit)
One more concern is that the Chicago herb expanded their production ability...