Pyrex Case Memo
As one of job requirements for an MBA internship, you are assigned to make a
recommendation on a make-versus-buy decision for World Kitchen’s strongest brand,
Pyrex.
A number of potential suppliers have substantially lower labor costs, but additional factors
such as quality, product mix, transportation, utilization, intellectual property, and tariffs
must be considered for decision analysis.
PLEASE USE THIS SET OF QUESTIONS FOR YOUR CASE ANALYSIS AND
WRITE_UP TO EARN THE POINTS.
Pyrex Case Analysis Questions
•On what dimensions does WORLD KITCHEN’s Pyrex product line/brand
compete? In other words, what are the OQ/OW of WORLD KITCHEN’s products?
What are the primary cost drivers associated with manufacturing Pyrex products in
the Charleroi plant? Use the following table for the cost driver analysis.
•
•Assume that the Charleroi plant and suppliers A through G are able to operate at
100% capacity (for an apple to apple comparison). How do the estimated price per
pound in Exhibit 5 change given this assumption? Show the comparison of all 7
suppliers and WORLD KITCHEN for total price per pound, which includes
variable cost, fixed cost at 100% utilization, tariffs, and freight cost per pound.
•
For example, WORLD KITCHEN at 100% utilization,
•Variable cost per pound = $0.930 x 42% = $.391
•
•Fixed cost per pound = $0.480 ($0.539 at 89% utilization)
•
Total annual fixed costs: (47,000,000 * .89) * ($.930 * .58) = $22,563,102
