Re: Benefits of using new Design.
Message:
Being an engineer for ACME Heating and Cooling Limited, I found a necessary matter to be brought under your concern, and I am writing this memo to serve my purpose.
ACME is producing fuel-efficient oil and gas furnaces for home heating since many years, and this is one of the best selling products of our company but recently, there is a problem in a new heat exchangers. The exchangers are unable to perform properly and due to our warranty with every exchanger; many products are presented to the company for replacement.
If we estimate the cost of replacement; it is $425 per furnace and the profit we earn from each furnace is $200 which means there is a loss on the replacement of each furnace. The production problem costs heavily on the pockets of the company. Therefore, after careful calculations and research I am successful to find a way out of this problem. The real problem is the mental stress which ultimately leads to the failure of furnace; therefore if we redesign the shape of baffles, change the type of steel being used and procedure of welding, our product will turn out perfect for home use.
I have estimated the cost for these necessary amendments, and it is $40 per furnace. This cost is way less than the cost we are incurring right now in replacement. Moreover, although it will reduce our profit to $160 per furnace but isn’t it better than suffering a loss of $225 per furnace. We can cover the losses in the short -run and can continue with replacement procedure but in the long run, we may ponder over the point to stop production completely.
Our company is one of the top ranking companies of Canada, and many users buy our product due to brand loyalty. Recent production problems are affecting our image in the market and may force users to switch over to the products of competitors. Therefore, by making these necessary amendments, I assure you the success in our production once again and we will be able to make higher profits in the long run.
