AIC Netbook Harvard Case Solution & Analysis

Introduction:

            Advanced Integrated Circuitry (AIC) started its operations in 1992 in Taiwan as a producer of printed circuit board, mother board and computer graphic cards. Initially, it used to focus on a PCI bus chipset that launched the launched with the Intel Pentium CPU in 1993. In early 2000 AIC became an original design manufacturer (ODM) that industry wanted from a manufacturer. The reason behind such name was the innovative products of each component that is used to produce for its customers. This innovative design work gave it an opportunity to maintain long term relationships with its customers.

            In the fall of 2007, it had decided to diversify its product portfolio to consumer electronics, with particular focus on mobile technology. The company had a view that the most hardware had become a commodity and healthy profits could be achieved through diversification. It followed the strategy of big brands like Dell, HP, Sony and many more that are purely focused on the production of end products for its consumers. The middle-class mobile phone’s demand was growing in the Asia-Pacific market; therefore it wanted to give a new brand to the consumer market. Moreover, it realized the Netbook is an attractive platform for AIC to enter in the consumer market.

            Prior to 2007, the ultra portable computers had a cost of around $2000 but these became more famous after the non-profit laptop name One Laptop per Child (OLPC), the laptop was developed to be used in the classrooms of the developing countries. Many of the companies followed the trend and came with low-priced ultra portable computers. Afterwards, ASUS proved that a viable market existed for low cost computers to middle-class consumers in Europe and United States rather than the students of developing countries. It came with 7 inch screen with 4 gigabit solid flash memory with a weight of 2 pounds and the price of $399. Due to attractive prices it sold 350,000 units in just 4 months of tenure. After few months major PC manufacturers launched similar devices. AIC started QuiN’s development in March 2008 and the quick net was about to hit the market in the 3rd quarter of 2008.

Analysis:

            The analysis is about the quantitative analysis of its existing assembly line system of QuiN816 and any recommendation to reach at the optimal efficiency of the production and distribution division. The profitability matters, and the analysis is about the current profitability and any other reasonable measures that can increase the profitability of the business and increase in revenue to best utilize the resources.

Current production:

            In current production, AIC can produce 118,491 units, which can be produced through its four production lines with manufacturing efficiency of 50 seconds per unit per production line. Although through its current production efficiency, it cannot meet the current demand of 130,000 units per months, thus, it can be very disappointing that a customer goes home without a Netbook. The company has to take some of the efficiency or overtime production measure to increase the number of production units at least 130,000. The excess must not be too high as the production cost and was tages increase high. The current production units can give a profitability of $2.275 million. The profitability can be increased by producing an optimal number of units that are demanded in the market per month (Appendix 1).

Revised production:

            There are four possibilities that can increase the productions and those are defined in detail below.

AIC Netbook Case Solution

Three shifts per day:

            It has an option to have 3 shifts per day that cover all 24 hours a day for working. Over here, it has to train and hire new employees because current employees cannot work for non-stop 12 hours a day. Through three shifts per day, it can produce 177,737 units per month. The production is very high and the demanded units by 47,737 that are useless, therefore the wastage and production cost can be high in that case. This is the only thing that makes this option viable which can increase the demand with the same number of units as the number of production units (Appendix 2).

            However, meeting the demand is the first priority as in the future the demand can increase and therefore, this option can be suitable according to the demand per month. This requires a huge training and recruitment cost, therefore the option does not seem to be attractive in the current demand position. Thus, estimation is required to meet the demand and the production units around 130,000 units. The option is also not suitable due to human efficiency.....................

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