Principles Of Operations Management
Principles Of Operations Management
11th Edition
ISBN: 9780135173930
Author: RENDER, Barry, HEIZER, Jay, Munson, Chuck
Publisher: Pearson,
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Chapter 2, Problem 11DQ
Summary Introduction

To determine: Operations strategy for Southwest Airlines after purchasing AirTran.

Introduction:

Southwest Airlines:

Southwest airlines Co. is a Major US Airline company known for providing low cost services. Southwest airlines acquired AirTran which is another low cost airline at the end of 2014.

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Company C currently sources keyboard components from various suppliers. Company C calculated that the external transaction costs of sourcing components would amount to $10 million, and the internal transaction cost of manufacturing the components would amount to $8 million. In this scenario, Company C should a. exit the keyboard industry. b. diversify its activities. c. vertically integrate. d. continue to outsource production.
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