You are the manager of an independent manufacturer that sells protective cases f

Question

You are the manager of an independent manufacturer that sells protective cases for the Samsung Galaxy. Samsung produces half of its phones at a plant near Hong Kong and the other half at a plant located near Shanghai. Both plants are running at full capacity. You have just learned that rioting workers have destroyed the Samsung plant near Shanghai and it will take at least a year before the company can construct a new plant to produce additional Galaxies. Explain how this news will this affect the amount of inputs you order for your own manufacturing activities? Explain how it will affect the number of employees you schedule? All other things being equal, what will happen to prices of the Galaxy and the iPhone? Why?

Explanation / Answer

With the destruction of samsung plant near shanghai , there will be drastic decrease in the amount of inputs ordered for the manufacturing activities because the production capacity of the plant has decreased considerably with the destruction of manugacturing plant which will even effect the inputs ordered.

There will even be impact on the number of employees employed in the manufacturing process as employees demand in the company will go down with the destruction of manufacturing plant.

The Prices of samsung and galaxy phones will shoot up with the news of destruction of manufacturing plant being public because now there will be shorage of galaxy and ipones till the time the manufacturing activity starts normally for the company.and so the prices of the samsung phones shall rise.

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