Executive Summary - University of Pennsylvania
Sample Executive Summaries 1
The most important factors that affect average costs in the company are the number of stamp
operations, the cost of materials, the managers in charge of production and, as a fixed cost factor,
the number of units produced.
Each stamp operation increases the average cost of a block by approximately 30 to 75 cents.
With 10 and 11 stamping operations for each block, this could lead to final stamping cost up to
$8.25 per block. A small decrease in stamping costs would have a large benefit in terms of average
cost. Therefore, we recommend focusing on alternatives to bring down the number of stamping
operations per block or to attenuate the cost of each operation.
Material costs are another fundamental cost component that must be controlled because it has a
leveraged impact on average cost. For each $1.00 spent on material costs, there is a $1.37 increase
on average cost. The company should be alarmed by material loss during production and should
also look for cheaper or/and more cost efficient material to use in production. These variables have
effect on material cost, which in turn affects our target variable, average cost. For example, keeping
all other variables constant, if the company bought material $1.00 cheaper for each kilogram (Cost
per Kg), material cost would drop $1.81 and the final average cost would drop by $2.47 (1.81 x
1.37). For a 1000 block production, this would mean $2,470.00 less in total cost.
Finally, in the short term from the average-cost perspective, we recommend the company not to
worry about inefficiencies caused by room temperature, environmental music or plant used for
production. These factors do not affect average costs and do not require costly measures.
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