question archive Case Study: The Matador Casting Company Matador Casting Company has been in business since 1940
Case Study: The Matador Casting Company Matador Casting Company has been in business since 1940
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Case Study: The Matador Casting Company
Matador Casting Company has been in business since 1940. They make custom aluminum, iron, bronze and brass cast metal parts using a sand casting process. Traditionally the cost of a finished part is estimated on a per-pound basis for the finished part. The prices to customers are quoted based on how difficult the part is to cast. Parts that are difficult to cast require more handling, more finish work and have higher scrap rates.
The problem Matador is facing is that they are losing money on many jobs. The per-pound method of costing does not accurately take into account differences in labor and materials between different jobs and, as a result the pricing to customers is inaccurate and often fails to be profitable.
Your Industrial Engineering team has been hired by Matador to analyze and propose more accurate methods for estimating prime costs (labor and material) for different jobs. You will provide your proposal in the form of the engineering design process using the template that has been provided.
You will follow the following sequence:
define the PROBLEM;
discuss current PRE-EXISTING KNOWLEDGE on determining labor and material costs (use the textbook, lecture and internet searches) and explain how these methods could be applied to the Matador problem;
explain to Matador management how you would go about MODELING and testing the different methods to help them understand how they would provide better results;
and finally explain how you would EVALUATE the results of the Modeling to recommend the best method (if you recommend more than one best method then explain under what circumstance they might use each method).
In the Evaluation section consider the implications for Matador if they should start quoting higher prices for some castings. Keep in mind that customers expect difficult castings to be more expensive but they will tend to choose the competitor with the best price (since casting quality tends to be pretty much the same between competitors.
One suggestion for this project is to check metal casting and foundry websites on the Internet to better understand the process and possibly how other companies may be determining costs.
