Kaiser Company Just Hired Its Fourth Production Manager in Three

question 183

Essay

Kaiser Company just hired its fourth production manager in three years. All three previous managers had quit because they could not get the company above the break-even point, even though sales had increased somewhat each year. The company was operating at about 60 % of plant capacity. The flatware industry was growing, so increased sales were not out of the question.
I. R. Thinking took the job as manager of the production division with a very attractive salary package. After interviewing for the position, he proposed a salary and bonus package that would give him a very small salary but a large bonus if he took the operating income (using absorption costing) above the breakeven point during his very first year.
Required:
What do you think Mr. Thinking had in mind for increasing the company's operating income?

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Definitions:

Supply Chain

The system of entities, individuals, processes, data, and assets engaged in transferring a product or service from the producer to the consumer.

Logistics

The coordination and management of moving goods from their point of origin to their final destination.

Marketing Mix

The combination of factors that can be controlled by a company to influence consumers to purchase its products, often summarized as product, price, place, and promotion.

Promotion

A marketing strategy used to increase awareness, interest, and sales of a product or service through various means such as advertising, sales, and public relations.