1. Which criteria should be used in selecting orders?

* While selecting the orders, there should be a proper coordination between Marketing and operations. If operation is estimating on the quote and the delivery date then Marketing should not over-write it without consulting operations. The people in operations can also be aware of the market conditions and the corporate goals. This can make less difference in the quote. * The job must fit with Ti-Techs high quality image and capabilities * The Company should have experience with similar products * Clear specification and job scopes * Contribution before S, G&A should be 20% of the selling price * Simple design and reliable cost estimates * Progress payments on labor and material (as applied). * Market area potential * Job allowing adequate delivery time. * Acquiring or developing a standard product line. * Opportunity to add a new capability to Ti-Techs operation. * Able to meet Contingencies. 2. What are the major characteristics of each order relative to the criteria? * Market area potential Stone parker. * Opportunity to add a new capability to Ti-Techs operation Northern Paper * The Company should have experience with similar products Hendrick Construction * Able to meet contingencies - Chemco 3. What is the best order? Let us first see which not the best is: * Stone Parker is not the best because it requires unusual fabrication with which Ti-Tech is inexperienced. Also, Stone Parker is making progress payments only on raw materials and not labor. The stone parker had a very high material cost. And unusually low labor cost. This may create problem because there may be labor uncertainties.The Subcontracting is the minimum and cannot go down. Though it has a contribution of 20% , still the labor cost uncertainty and high cost of material makes them unattractive. * Chemco is not the best because it is not a...

Ti-Tech Ti-Tech currently has an acute shortage of capacity and increasing customer dissatisfaction with late deliveries. They need to decide which of the four potential orders the company should accept and how the company should bid on them. Ti-Tech has 16% of total market

 Titanium industry is growing by 15% to 20% during the foreseeable future Company objective is to have cost of goods average 80%, with 85% the upper limit 2005 company established policy allowing a maximum of 20% of its business to reside with one company Over-time is possible however; it will be difficult because orders are already backlogged. It is also expensive (150%), may bother productivity and quality, and no place to store work in progress. Hendrick Construction Pros: Cons: Ti-Techs largest customer Claims to have a close relationship Worlds leading engineering contractors Does little titanium work, Ti-Tech specializes in titanium Largest of four orders, $12 million Willing to pay 80% of direct material and labor as applied Involves a payment process, one/two payments will come in 2007 fiscal year Always makes payments on time Predicted to be 16% of sales in 2007, falls within policy of 20% Does some inhouse fabrication of super-alloys and titanium Trained staff of field welders and supervisors Rumors for the past four years are that they may set up a fabricating facility (executives are unwilling to discuss, relationship may not be as strong as Ti-Tech perceives) Unsatisfied with previous deliveries, may change manufacturer if continues or in house Ti-Tech would have to begin this project now to be completed on time; shortage of capacity is already an issue

Stone-Parker Pros: Cons: Four year relationship with Ti-Tech Strong position in a growing market Opportunity exists to take competitions market share, competitions quality is not high enough Develop the capability for unusual fabrication Not sure if they have capacity or hours to fill the order Involves unusual inexperienced fabrication Progress payments only on raw material Northern Paper Pros: Cons: Enables Ti-Tech to ease management task, train employees on standard work, smoothes work flow and will soon develop a sales force Northern is willing to license item to manufacturer Can develop a heat-treating competence in-house $900,000 subcontracting expense for special heat treatment vs. developing in-house No process payment 0.1% penalty for each working day the complete order is late, no incentive offered for early delivery Chemco Pros: Cons: Already holds a good relationship Less risk Focus on current issues within the company, acute shortage and dissatisfied consumers Temporary job

After evaluating the pros and cons of each option, I believe that Ti-Techs best choice would be Northern Paper. The order with Hendrick Construction would have the largest contribution in dollars. However, the risks are too large for the company. If the rumors are true about Hendrick constructing their own facility, Ti-Tech will lose approximately 16% of their business. There are currently 11,220 units backlogged for June of 2007. This project will have to begin immediately, not giving Ti-Tech the chance to catch up on their current late deliveries. The problem will increase. Stone-Parker has the highest contribution margin of 20%. However, Ti-Tech is inexperienced with the type of fabrication required. Ti-Tech is not sure that they have the capacity or time to fill the order when needed. Instead of expanding their fabrication to fit this order, Ti-Tech should focus on minimizing errors that exists within the company at the moment, which leads to Northern Paper. Northern Paper is the most simple and standardized order. This order will enable TiTech to ease management task, train employees on standard work, smooth work flow, and soon develop a sales force. Since this job will require less experienced workers and training, this order can be done the quickest with the least risk. Ti-Tech will be able to focus on the shortage of capacity and decreasing their customer dissatisfaction with late deliveries. This order meets most preferred criteria for both operations and marketing including: design is challenging and simple, long-run, repetitive, potential for further development and overall contribution is near 20% of the products price (18%). Contribution will increase over the long run. Chemco would be a great order to bid on, but they will be a short term customer. The market is already unstable. Ti-Tech needs to emphasis on long-term relationships and a stable market. To make sure Ti-Tech maintains relationships with their existing customers, they need to update customers on existing problems. Integrity is very important in business. A company should always say what they do, and do what they say. Since a sales force will be formed, salespeople can emphasis Integrity. Existing customers will be unsatisfied with their late delivery, so Ti-Tech can offer a small discount (4%) on their next order. After Ti-Tech resolves the acute capacity shortage and dissatisfied customers through small amounts of overtime, they should begin the order through Northern Paper. If Northern Paper is not willing to wait the couple months it takes to resolve the existing problems, Ti-Tech should not place the bid. It is unbeneficial to gain new customers if a company is throwing away current customers. A realistic delivery date should ne place because of the 0.1% penalty if it is not completed in time.