Question

RDC has the option to outsource a major component (C400) of another product (the M40) in order to free up some automaton equipment so that it can use it as a test bed for development of new and innovative products. RDC's customers often order spare C400's unpredictably. OMC is a prime candidate for manufacturing this C400 component. In the decision whether to outsource the C400 component or not, which of the following factors is most critical for the RDC Operations Manager to address?

a.Equipment layout and work flow of the OMC factory

b.Work habits of the OMC work force

c.The manufacturing lead time of the component

d.The complexity of manufacture

e.The order size of the component

Answer 1

C.As the demand is unpredictable your manufacturing process should be highly flexible to the cutomer needs.

Option A is ruled out as equipment layout and the workflow of the OMC factory is irrelevant to catering to the unpredictable demand needs

Option D becomes non-important as OMC is already a prime candidate for manufacturing. This factor becomes relevant when the vendor to which the manufacturing is outsources doesn't have proven capability in manufacturing

Option E is also important to accomodate the Crests and Troughs of the unpredictable demand but this comes next in priority after Option C

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