Operations Decision
RPM Furniture Distribution Cente
ECO 550 Managerial Economics and Globalization
November 29, 2013
Introduction
In this paper, I will help the executive management staff of RPM furniture determines if they should continue operation or shut down their manufacturer center completely. RPM Furniture Outlet has been in operation since 1989, the company has found that the need for affordable quality furniture is needed in North Carolina. In order to cut cost the company has decided to manufacture their own furniture. RPM specializes in customize pine pieces that is hand crafted by professional craftsman. Each piece is customize and crafted to suit the customers preference, budget, and style.
Assess the current environmental scan factors that are relevant to the decision making process.
RPM uses a100 craftsman to produce 6000 units of output per month. The Craftsman is working 20 days per month. They are being paid $70.00 a day and the price of the company’s output is $32. The cost of the other variable inputs is $2000 per day. The stores fixed cost is “high enough” so the firms costs exceed its total revenue. In order to give an accurate forecast to the management about the success of the company I will assess current environmental factors. Companies that are environmental aware are far more successful than their competitors. Environmental factors are imperative to RPM’s decision making process to keep operating or close down. Some of the factors that can influence upper management decision are the customers’ ability to buy in stressful economy, according to Leslie Carothers of The Kaleidoscope Partnership “When the economy is good people are definitely more willing to invest in furniture as well as better quality furniture as they have more money for such investments.” In addition she believes that, “whether or not a local economy is strong, furniture companies, whether retailers or manufacturers, who are executing in the...