• We Solutions Technology—Dilemma of CNC Drilling Machine Purchase

Abstract

Da-yu Chen, the General Manager of We Solutions Technology, was optimistic about the off-patent CEL (California Eastern Laboratories) body market with unlimited potential and purchased Daisho Giken, a Japanese company that had exited Taiwan’s market because of losses. However, because the semiconductor industry is continuously shifting toward nanoscale technology, Chen is facing the dilemma regarding the purchase of CNC drilling machine, which is of considerable importance to machining quality. The dilemma relates to whether to purchase drilling machines with the same model as those currently being used in the plant at low prices and of passable quality or to increase the budget to purchase drilling machines with higher prices and improved production quality. Based on a series of discussions among General Manager Chen, Special Assistant Li, and Plant Manager Masataka Tachida, this paper provides a cost analysis using experimental data related to drilling machines, identifies the key variables affecting total costs, and draws the conclusion that the optimal strategy is not to purchase the cheapest or the most expensive machines, but instead to consider the optimal production costs and benefits.

This case study not only serves to explain the effects of the production elements of CEL bodies, which are one of the key semiconductor consumables on thein terms of cost, but also enlightens students about the operation situations in plants. Through an analysis of the product costs of CEL bodies, the study enables students to calculate various production parameters and understand the effects of various parameters on productivity benefits, labor allocation, and product costs while learning about production operation management, industrial engineering management, and cost accounting. Finally, the best machine purchasing decision was determined to create a competitive advantage for the company.

Keywords: Procurement Cost, Purchasing Decision, Optimal Cost