Stryker Corporation Case

Free cash flows of the project for next five years can be calculated by adding depreciation values and subtracting changes in working capital from net income. In 2010, there will be a cash outflow of $2.2 million as capital expenditure. In 2011, there will be an additional one time cash outflow of $300,000 as an advertising expense. Using net free cash flow values for next five years and discount rate for discounting, NPV for the project comes out to be $2907, 100. The rate of return at which net present value becomes zero i.e.

Based on the 3 types of quality costs that have been discussed and reviewed above, I recommend that we look at doing more appraisals and inspections during the manufacturing process, this will limit the number of design changes that happen early in the process but it should help in cutting down our external failure costs and help limit

The recommendations I would suggest for structuring the supplier relationship process for the Wolf Motors dealership network are Wolf Motors should consider a centralized corporate level Materials Management System to consolidate buying decisions for each of the 4 dealerships. This would facilitate greater leveraging with suppliers for consistent quality-control. They should study, calculate and make effective decisions on the materials that should be brought for each of the four dealerships instead of allowing each dealer to do it on their own. An automated

3. Given Stryker’s strategy and its long--‐run goals, what modifications to the current system— analytical, organizational, and/or procedural—would you recommend? Develop some specific proposals and explain how they address specific problems.

Internal Rate of Return is a discount rate in which the net present value of an investment becomes zero. The investment should be accepted if the IRR is not less than the cost of capital. The IRR measures risk, by showing what the discounted rate would have to reach to lose all present value. Futronics Inc. investment would have an IRR of 14.79%. The investment should be accepted since it is greater than the 8% cost of capital. The 14.79% IRR shows the growth expected from the

To help mitigate the supplier risks, determine the supplier’s attitude to safety, quality, and environmental aspects to delivering components. Another treatment would be to appoint an onsite supplier liaison manager responsible for signing off on any supplier and/or design changes. It would also be helpful to have back to back contracts with sub-contractors.

meant that the alternative supply of wafers would have to be found or developed in house · $40-$50 Million to develop in house

Recommendation:1. Improve Just-in-time systemSpartan Plastic Limited need to improve Just-in-time system, it is control aims to maintain inventory level at zero, with an immediate objective of reducing the capital tied to the inventories. It is an important principle that able to eliminating waste throughout the production system. The waste can occur, through excess inventories and overly large lot sizes, both of which can cause unnecessarily long customer lead times. Let's explain the role of the core JIT practices in enhancing manufacturing performance. JIT manufacturing requires the establishment of JIT supplier relationships with suppliers; Spartan in this case, that is able and willing to deliver the needed quantities of parts as the needs arise and without any defects.

The process was labor intensive, but fully integrated manufacturing only required a $1 million investment in machine tools. Prefabricated parts were available for assemblers, who could enter the market with an investment of just $300,000. Furthermore, no competitor held any significant patents.

Thus, by year three the company will be making a profit off the investment as year three is 86.73 million profit by 55.35 cost giving the company a 31.38 million dollar surplus. Generally, a period of payback of three year or less is acceptable (Reference Entry) causing this project to be viable based off the payback analysis. Although, these calculations are flawed. The reason for this is because the time value of money is not taken into effect when calculating payback periods which is where IRR can further assist in a more realistic financial picture (Reference Entry).

1. Two commonly used methods of financial analysis are payback and present value. Payback determines the length of time for an investment to return its original cost (1). Using the assumptions stated below the payback of the Jiminy Nick wind turbine with a cost of about $3.3 million would return the investment in about four years time. Net present value summarizes the initial cost of an investment, the estimated annual cash flows, and expected salvage value, taking into account the time value of money (1). A NPV calculation for the scenario SED is reviewing equals $7,697,286 minus the investment costs of $3,318,000 totaling $4,379,286.

Estimated machinery life: 3 years (after which there will be zero value for the equipment and no further cost savings)

Products and markets to pursue (The Arenas): NYC2 would compete in the niche Computerized Precision Rotary Actuator (CPRA) product line to become the market leader, while seeking to consolidate the current market position in the HPRA and winding down the EPRA product line. NYC2 would serve the leading original equipment manufacturers (OEMs) of heavy equipment serving industries such as energy, construction, agriculture, marine and material handling in the North America, Europe and Asia regions that require high precision, durability and reliability.

3D Systems heavily relies on outsourced supplies to achieve its print obligations. The company outsources printer assembly and refurbishment services from selected suppliers and engineering companies with a good reputation. The suppliers play a critical role in carrying out the required quality control initiatives prior to shipment.

A Make-or-Buy Decision at Baxter Manufacturing Company Scenario Summary Baxter Manufacturing Company (BMC) is a leader in deep-drawn stampings. It has been in business since 1978 as a privately held company. The process for making these stampings is very involved and complex. BMC developed methods for efficiently producing large volumes of stampings while keeping their quality very high. BMC uses state of the art machines to make the stampings and they make all the tooling necessary for those machines. In the years since their founding, many changes have impacted the industry – especially when it comes to computer networks and software. In the 1980s many of BMC's customers went to Just In Time