Micro Devices Division is a supplier of Integrated Circuits. They have 3,200 personnel salaried per hour. Since 1989 they have an operating budget of around $200 million. The IC market is price sensitive. Micro Devices Division decided not to compete with other Integrated Circuit producers. MDD concentrated on designing and manufacturing proprietary designs to get a competitive advantage in the market. Due to these decisions, the MDD company has experienced a conflict with regards to their supply and demand.
ANALYSIS OF MICRO DEVICES DIVISION
MDD has 60% of total semiconductor requirements supplied by outside manufacturers. They also gave other suppliers a big share in IC volumes in return to accessibility of the latest technology. MDD used to develop unique applications. Now, MDD faces competition from lower-cost suppliers in the market. They are also operating far below capacity. A Wafer Fab facility can process 650 wafers/day but only processing 350. MDD needs to allocate limited resources and prioritize project activities. The company should create the most efficient schedule, minimizing project duration while maximizing use of resources available. They should use critical path method and heuristic analysis.
The Wafer Fab facility yields high. They are low on demand but very high on supply. They should whether choose what they need prioritize, either fixed cost or the variable costs. The fixed costs remain the same whether the business is running at 100% or closed. The variable costs on the other hand may increase depending on how much production is done.
The key for MDD to improve is produce a successful management plan prioritizing availability, optimization and proper scheduling. The company should analyze their supply and demand. The importance of giving priority in operating costs is also vital to improve.
Batina, J. (1990). Micro Devices Division. Harvard Business School.
Samuelson, P. A. (2001). Economics. USA: McGraw-Hill.