,,,,, if you were on the position of Dr. Fox, what would be your analysis of thi
ID: 369017 • Letter: #
Question
,,,,, if you were on the position of Dr. Fox, what would be your analysis of
this ‘make’ versus ‘buy’ decision problem? What would you recommend, and
why? Show your work.,,,,
At 2:30 p.m. on September 8, 2006, Dr. Steven Fox, dentist and head administrator of the largest office in Dental Associates of Northern Virginia, received an urgent phone call from the group administrator, Dr. B: "Steve, I'm in Chicago with a Patterson representative and have been presented with a deal on the CEREC3 machine capable of making all-porcelain crowns 'in-house in less than an hour. I need a decision within 24 hours on whether or not we should acquire one for your office.' DENTAL ASSOCIATES Dental Associates was founded in 1965. Since that time, the dental practice had grown from two dentists to 15 with plans for further expansion. Dental Associates operated six offices in the Northern Virginia area outside of Washington, D.C. in Alexandria, Fairfax, Fair Oaks, Skyline, Springfield and Tysons Corner. These offices were conveniently located to address more catchment areas within the greater D.C. metro area. Every doctor ran their own 'private practice' within the group so that returning patients developed a level of comfort with a particular doctor while having the added flexibility of being able to see a different dentist in the event of an emergency. The founders of the group decided early on that one dentist needed to oversee the business operations of the entire group while others needed to act as head administrators for each of the six locations. Dr. B was selected as the group administrator. The six head administrators became the core dentists with whom he would consult concerning strategic decisions such as new equipment purchases and general operations. Unlike Dr. B, the head administrators practiced dentistry in addition to their administrative functions. Dr. Steven Fox Dr. Steven Fox was the head administrator at the largest office in the group called Skyline, nestled in Falls Church, Virginia. In addition to being a long-time colleague of Dr. B, Fox had been a close friend and partner with Dr. B since 1965. He was known for his dedication and interest in dental innovation, and spentExplanation / Answer
If I were at the position of Dr. Fox, I would have recommended to buy the new machine CEREC3 and to make the crowns in house instead of buying from outside laboratory.
As we know the major factors to decide make or buying depends on the qualitative and quantitative considerations. But simultaneously I have to see the customers' convenience. The advantages can be summarized as under -
1. The quality of the crowns will be improved in case of in-house manufacturing with CEREC3 machine.
2. The delivery constraint will not be there.Customers have to visit only once.
3. The quantity can be manufactured as per the requirement.
4. No additional man power is required since the machine is robotic operated.
5. Dental Association first made crowns in house from year 1974 to 1998 but in year 2000 they out sourced the Porcelain crowns to Arrow Dental Lab and retained 2 small labs for manufacturing Acrylics and PFMs.
6. The CEREC3 will cost US$100000 and crown cost will be only US$25 plus mold cost US$15 i.e. total US$40 only. If the life of the machine is 5 years then per year cost comes to US$20000 while saving per crown is US$150 minus US$40 i.e.US$110. The cost of machine will be compensated with only 182 crowns ( 20000 divided by 110). Thus cost factor also allows to go for in house manufacturing.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.