Teloxy Engineering Case Study

“Teloxy Engineering “ has received one-time contract to build 10,000 units for a new product One component which is required to make up the product cost $60 when we buy from outside which includes discounts. So management makes up the budget to $650,000 to design the product. The normal estimation of the venture is the aggregate base cost of the task and the aggregate cost of repairs for the segment. Starting setup required is 10,000 dollars, the Raw material cost for every segment is 40 dollars and the cost to repair each part is around 120 dollars. At the designing stage, of the product manufacturers thought the product design may cost more than the estimated budget because it requires a high grade component to make up the new manufacturing

When we buy the product from outside the cost to spend is more which is overrun to make up the product which results in the loss as it crossed the estimated budget.So, if Teloxy Engineers worry about the rise in the cost and if they decided to manufacture the product at a cheaper price than the market value. firstly as they are new to manufacture this product for the first time they need to apply trial and error methods in every stage of the manufacturing because they don’t have any idea of this product because they didn’t handle this type of product designing in the past years, so the workforce should be hired more number in order to complete the 10,000 products. I think buying components from outside instead of manufacturing is better for Teloxy Engineering since they are new to these manufacturing chances are very high that their products could be defective, and the time is taken to resolve these defects and cost to fix those defects are also high. If we are unsure of what this demand could go up to, I would suggest buying products instead of designing