Case: The Engineering Company for Engines was established in 1970 to produce small engines, and there was no specific pl

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Case:
The Engineering Company for Engines was established in 1970 to
produce small engines, and there was no specific plan for the sizes
of engines produced by the company. And since it was seeking to
satisfy the desire of its customers who were factory owners, it
found itself producing a wide range of sizes. The company's
production was divided into two groups:
The first group is characterized by a mass production system to
meet the needs of the market, and the second group is characterized
by a production system on demand.
The company moved its production divisions for the first group
in 1995 to a new site about 200 miles away from the old site. The
new factory had a modern design and was equipped with modern
machines and designed on a production line system, and the company
did not transfer production departments on demand, but the high
production cost made this one of the possibilities that must be
studied.
The most important factors that led to the transfer of the
departments of the first group was the old machines. Although the
company had a good reputation for its production, it was making a
very limited percentage of profits. Therefore, the company's
management decided to negotiate with a bank to obtain a loan to
purchase a newly equipped factory that was offered for sale.
After the purchase of the new factory and the regularity of work
in it for one year, the company's business showed remarkable
profits in the production of the modern factory, but the old
factory did not show profits except in a small number of orders
that it produced. In the management's view, this is due to the high
rates of wages and the low production efficiency of the machines
used. The hourly labor cost in the old factory was 30% higher than
in the modern factory.
The company's management has considered four suggestions to
overcome this problem:
Additional information:
Required:
1- What are the considerations that should be considered before
reaching a decision on this problem?
2- Evaluate the four proposals
3- What are the factors that the administration should study
before deciding to stop the production of one of the types in the
old factory?
4- What is your suggestion to solve this problem?