Workers at a factory in Guangdong province have complained about low pay and aggressive and verbally abusive behaviour from managers. British-owned luxury goods manufacturer Burberry has pulled production of its bags from a factory in the Guangdong province of China.

The move follows concerns that working hours and conditions at the factory, operated by the Korean company Simone Accessories Collection, were in possible violation of Burberry's ethical guidelines. The China-based factory makes handbags for several Western clothing and accessory brands.

There's a big potential upside to GM's insourcing effort - if managed correctly. 'Higher productivity, lower management burden, reduced travel costs, improved quality, reduced 'rework', increased convenience of shared working hours and better cultural fit are all tangible benefits experienced by organisations that have repatriated roles,' says F. B. Mack, director of operations for outsourcing advisory Sylvan Advisory.

Discuss GM’s and Burberry’s decisions to insource more of their operations.

Define the term ‘outsourcing’.

Define the term ‘supply chain’.

Define the term ‘total quality management’.

Explain the following terms:

a. buffer stock level

b. stock re-order size

c. lead time.

Explain, with business examples, the difference between crisis management and contingency planning.

Define the term ‘capacity utilisation of $\%90’$.

Define the term ‘buffer stock’.

An electrical assembly business, located in Europe, produces several products. The following data (in US dollars) are available for two of its key components, X and Y:

$$\begin{array}{|l|c|c|} \hline \textbf{ Products } & \mathbf{ X } & \mathbf{ Y } \\ \hline \text { Direct labour costs per unit } & \$ 5 & \$ 7 \\ \hline \text { Direct material costs per unit } & \$ 4 & \$ 12 \\ \hline \text { Fixed factory costs directly allocated to each product (monthly) } & \$ 2000 & \$ 3000 \\ \hline\text { Business overhead costs (administration and marketing) } \\ \text { allocated to each product (monthly) } & \$ 6000 & \$ 8000 \\ \hline \text { Current monthly output (units) } & 500 & 1000 \\ \hline\text { Unit cost of product if bought-in from supplier (including } \\ \text { transport costs from Asia) } & \$ 11 & \$ 24 \\ \hline \end{array}$$

Calculate the unit direct cost of making product X and product Y.

Choosing the lowest-cost location for the Rolls-Royce factory was not a priority. When BMW moved production from the industrial northern town of Crewe, it chose one of the most crowded and expensive parts of the country - the south-east of England. The Goodwood factory has many advantages but low cost is not one of them. One of its main benefits is its proximity to a small airport where the helicopters and executive jets of intending purchasers of Rolls-Royce cars can arrive in style. Potential buyers are identified by the company and invited to visit the factory and attend events held at the nearby exclusive marina and horse-race and motor-race courses. The area has been termed a 'playground for the wealthy' and future customers often spend a day or two at the races or a morning at the marina before browsing the cars - and more often than not, signing an order form.

Analyse the importance of one qualitative factor affecting Rolls-Royce’s decision to locate in Goodwood.

Define what is meant by the term ‘quality assurance’.

Why does ‘cutting waste’ help increase business efficiency?

Define the term ‘crisis management’.

What would be meant by the term ‘optimal location’ for a new Walmart supermarket?