Efficiency & Cost of Production, ECON616-1304B-04 Class Applied Managerial Economics ECON616-1304B-04 Phase 3 DQ and IP Week 3 Applied Managerial Economics Phase 3, Efficiency & Cost of Production Phase 3 - Task 1 Task Type: Discussion Board Deliverable Length: Primary Task: 600–800 words Primary Discussion Response is due by Wednesday Primary Task Response: Within the Discussion Board area, write 600–800 words that respond to the following questions with your thoughts, ideas, and comments. This will be the foundation for future discussions by your classmates. Be substantive and clear, and use examples to reinforce your ideas: Additional Information: Because the decision about relocating manufacturing operations to the United States is so important, the board of directors at AutoEdge continues to systematically discuss every aspect of the situation. The following week, CEO Lester Scholl meets you for coffee to discuss next week's board meeting. "I'm hearing good things about you," he says. "Ingrid and George tell me you've been very responsive and helpful." "That's good to hear," you say. "I've enjoyed working with them." "We're both busy, so I'll get right to the point," he says. "One of the main objectives of any business is to be efficient. Without efficiency, the company is essentially losing money. Am I right?" "Absolutely," you say. "What must AutoEdge do," he says, "to obtain economies of scale with production? How do we know that it has achieved economies of scale? Conversely, how do we know if it is achieving diseconomies of scale?" "That's a good question," you say. "I can understand why you ask." But before you can respond, Lester's cell phone rings. After a minute, he ends the call and stands. "I have to get back to the office to handle an emergency," he says. "Would you send me an e-mail with an answer to my questions, please?" "No problem," you say. "I'll get it to you before I leave work this afternoon." "I appreciate it," he says. "Thanks." Phase 3 - Task 2 Task Type: Individual Project Deliverable Length: 1,200–2,000 words, including research in essay format Production Manager at AutoEdge, Sam Busch, is new to the company. He asks to meet with you to discuss some questions he has. "Thanks for meeting with me on such short notice," he says. "I'm still getting familiar with the situation here, and I could use your help." "Certainly," you say. "And congratulations on your new position with AutoEdge." "Thanks," he says. "I am preparing for a presentation to the board in 2 weeks. I've reviewed the most recent production reports, and I see that we are currently producing an engine part, for example, in South Korea for $110. This cost is much lower compared to the cost of producing the same part in the United States, which is $320 per unit. The disparity might be attributed to the cost of labor, unions, overhead, and operating costs." "That makes sense," you say. "If we return the manufacturing operations to the United States," he says, "what types of short-term and long-term variable and fixed costs should we consider? What costs should we expect if we stay in South Korea? What financial risks are the company and the stakeholders exposed to?" "Those are all good questions," you say. "Can I give this some thought and get back to you?" "Sure," he says. "I'll be working on my presentation next week. I'd like to get your opinion about these questions and the supporting research so I can include it." "That works for me," you say. "Glad I can help."