Executive Summary - University of Pennsylvania
Sample Executive Summaries 5
Executive Summary
Our analysis of the firms production costs indicate a disconnect between the variables that the
customers control and the cost of the production output. In addition, the firm can optimize the use
of its managers and the temperature of its plants to reduce production cost and improve the bottom
line.
Five of the six customer specifications do not affect the costs of the order. In particular, items
such as rush, detail, and stamp do not contribute to the cost and therefore can be exploited to extract
the highest profit. Any premium charged for these specifications will directly contribute to the
margin of the production. For example, a 200-unit, detailed job and a 200-unit, rush job both cost
$41 per unit to produce. Charging a $10 premium for the rush job would not increase the cost but
would directly translate into profits.
Second, one of the firm’s managers, Chris, produces blocks at $5 less per unit than other
managers. We recommend that the firm benchmark Chris' methodology to extract an additional $5
per unit produced. On typical production jobs, this would represent approximately $8,000 to
$12,000 in cost reductions. Further, the fact that Chris’ lower costs are not directly related to other
variable costs indicates that his methodology is potentially transferable.
Finally, it is imperative for the firm to alter its cost structure around the features of the job
related to chisel, labor hours, material costs, breakdown/unit, temperature and manager. These
features directly affect the costs of production and should be the guiding metric for the firm’s cost
function.
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