Eagle Machine Company Essay

shoot MACHINE COMPANY The Eagle Machine Company has fallen on bad sentences. Eagle, a maker of specialty restaurant equipment, has sales totaling $72 million, however sales are declining while costs stretch out to adjoin. If things continue in this direction, Eagle soon may have to close its doors. At a special counseling meeting, the president lays it on the line He demands that the firm break even in the remaining quarter of the year. For adjoining year, he calls for emoluments of 5 pct, a 20 percent increase in sales, and deeper cuts in labor, material, and overhead.Later in the day, the president calls Sally Stone, film director of supply caution, in for a discussion. Sally, I want your supply management people to carry the ball at the start of the game. We cant get sales moving for six months. except you can better your housekeepingand Eagles profitsright away. Just come back what you can do to that chart Every penny you save is profit So hire a close look at what y ou buy. I dont care how you make your savingsby negotiations, inventories, imports, anything. But put the screws on tightright away Start with inventories, theyre sky-high. So get together with manufacturing on a 10 percent cutWeve got $12 million worth of materials stashed away around here, and a 10 percent cut would save at least $300,000 a year in carrying charges. At the same time, get your payroll and run expenses bolt down 10 percent. That is in line with our companywide cutback. I know this hurts, Sally, because youve got any(prenominal) mighty fine people here in supply management, but we cant be sentimental these days. Our overhead has got to come downor were dead Im having an executive military commission meeting in one week. Have your plans ready by that time Were betting on you, Sally. Sally reports to the president, as do another(prenominal) department heads. Sally learns from bloodline control that raw stock inventory is $12. 2 million. The marketing manager cont rols finished goods stocks. Sally wonders how she can reelect the cost reduction and still keep her department and supplier dealings in shape for the long pull. 1. What actions should Sally take to reduce inventories by 10 percent? 2. What dangers, if any, are there in reducing inventories? 3. In what ways could the cost of goods purchased be reduced? 4. What position should Sally take on the presidents plan to reduce the supply management payroll by 10 percent?