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This final note in the four-part series on competitive-cost analysis introduces the concepts of learning curves and experience curves, which can be analyzed with a log-log relationship between unit cost and cumulative volume.

Spreadsheet for case UV3549

The founder and CEO of Edison2 and his internationally renowned team of designers, engineers, and professional race car drivers had worked tirelessly for three years to design and build the Very Light Car (VLC), which won the 2010 X Prize competition. Now the CEO is considering what path Edison2 would follow. The only thing he had decided is that Edison2 should not attempt to become a traditional auto manufacturer, given the large amount of new capital it would require and the likelihood that it would have to compete long-term with the established behemoths in the industry. The CEO has narrowed his choices to two possible paths: Edison2 could enter the specialty fleet market in the United States or seek out partners to reach the consumer vehicle market in the developing world. The company's dwindling supply of money is an issue so he needs to decide which direction to take the company and how to go about doing it.

It supplements case UV5191 and UV5193

After two hours of further intense, heated debate, Belton's COO has acquiesced and agreed with the manager of a large management consulting firm on every major point. But the senior partner on the assessment, as well as the consultant's mentor, considers the results disastrous. "Our job is not to be right, our job is to help," he says.

Spreadsheet Supplements case UV5194

It supplements case UV5946

Canyon Mining intended to purchase four haul trucks to use for heavy mining, and a team from Censeo Consulting Group must to identify a methodology to track cost changes over time for that purchase. The current project's primary objective was to estimate the year-over-year trend in factory manufacturing margins for these four pieces of heavy machinery. These estimates were crucial to Canyon Mining as contracts for heavy machinery lasted for five years and served as a baseline for future negotiations. Although the team arrived at 2008 cost figures for the four haul trucks, it still lacked insight into cost trends and accurate cost forecasting.

Consultants have been engaged to recommend the ideal operations strategy for Stickers by dVider, to support a dramatic increase in demand anticipated by the company as a result of its aggressive growth strategy. After reviewing dVider's current operations, including a rigorous examination of its key cost drivers, students are asked to consider if outsourcing could benefit the various growth opportunities under consideration, whether the potential cost savings would be enough to justify such a dramatic change in the production formula that had worked so well for dVider in the past, or was it outweighed by the potential risks of decreased production quality and longer lead times?

This case and "TONA Foundry" (UVA-OM-1348) provide data for the parties in a negotiation exercise. DOSA is seeking to buy a die-cast aluminum housing for a new motor design and has initiated negotiations with TONA Foundry, the incumbent supplier, for half of the housing in the current design. The new design will reduce some costs according to a cost model developed by TONA, and there are several potential additional opportunities for collaboration in the negotiation.

This case and "DOSA Motor Manufacturing" (UVA-OM-1349) provide data for the parties in a negotiation exercise. DOSA is seeking to buy a die-cast aluminum housing for a new motor design and has initiated negotiations with TONA Foundry, the incumbent supplier, for half of the housing in the current design. The new design will reduce some costs according to a cost model developed by TONA, and there are several potential additional opportunities for collaboration in the negotiation. The cost models developed by DOSA, however, do not match those developed by TONA.

Scoping the situation at the Mega Oil Corporation, a major management-consulting firm, had been the easy part. The firm is seriously behind its best competitors and risks falling further behind unless changes are made to reorganize its worldwide staff functions. Now the more difficult task is identifying and prioritizing the actions to take.

Spreadsheet for case UV1448

The first in a three-part series on Competitive Cost Analysis, this note provides an introduction to cost drivers and a conceptual framework for thinking about the different types. It also provides some general guidance on developing cost models.

Spreadsheet supplement for product UV0129.

Musictoday is a unique company that provides online retailing services for clients like the Dave Matthews Band and the Rolling Stones. But the lack of a formal inventory management process has Musictoday concerned about stock outs and lost sales in the future. This case introduces students to the Reorder Point System and the EOQ concept.

Go shopping in the "dollar channel" with this case, which explores the decision of a fast-growing company to expand its distribution network. The case provides financial information that allows students to build an understanding of the basic distribution-network design, which covers inbound transportation, outbound transportation, distribution-center operations, and inventory.

This case examines a set of expansion options for a successful Internet luggage retailer, with a particular emphasis on the operational complexities.

This disguised case examines the highly provocative issue of outsourcing to a low-cost country based on a thorough analysis of competitive cost drivers. The case demonstrates that labor cost is only one potential advantage and that transportation cost and other factors could more than offset labor savings in some product lines.