Microeconomics - Case Study Example

The firm has various assortments of brands which emanate from its strategies aimed at being among the leading marketers of automobiles alongside the core competitors such as Toyota, BMW, Ford motors among others. This paper will address the microeconomic issues relating to the firm’s operation globally. These include the manner in which the firm determines what to produce, how to produce, and the quantity to produce and for which market segment to produce for. Determination of the Quantity to Produce and Methods of Production The department of logistics and marketing are wholly responsible for determining the quantity that is to be produced and the methods to be used in the production of Mercedes-Benz.

The departments in question applies Evidence Based Supply Chain Practice (EBSCP) in determining the in plant flow of materials which seem to increase the speed of production. As part of the attempts the teams makes decisions to invent new procedures in the warehouses given the current procedures restricts it to carry out such duties such as selection, sorting, staging and hauling to the line of assembly. The departments ensure that raw material components are available on time at the line of assembly to enhance production process.

The team starts by carrying out a brainstorming exercise of numerous ideas which seek for ways to enhance availability and complete efficiency in the firm. The teams seek to determine the type of ideas that would work and the best ways of implementing the ideas to enhance effective and timely production. The members in the teams carry out consultation from the websites in regard to the customer’s preferences, tastes, trends in demand and buying behavior to determine exactly the quantity to produce.

The teams under these departments understand that the consumer always seek to maximize utility. Therefore in an effort to understand the consumer behavior, the teams make various assumptions about the consumers after a thorough research by the marketing department. Some of the assumptions made include; consumers’ preferences are complete in the sense that they are fully aware of their tastes and preferences. This occurs in such a manner that Mercedes-Benz is meant for luxury where consumers seeking luxurious automobile will have Mercedes-Benz as one of their choices.

Consumers show a habit of not being satisfied which helps the teams to invent ways of changing the model of the Mercedes-Benz and varying the models to suit their tastes and preferences. The theory of the firm in relation to the team production is also very critical within the firm. Mercedes-Benz firm management fully understands that production of Automobiles requires team work and thus the employees and staff are to be mobilized to pool their ideas in an effort to meet the production targets in the market according to the demand (Pride & Ferrell, 2012, p. 211). Owing to this dimension of thinking Mercedes-Benz assembles about 20,000 components and raw materials which are kept in the warehouse to ensure continuous flow of production.

However, among these items only 0.5% was delivered just-in-time to the line of assembly upon being picked from the storage zone that was dedicated. The team then opted for pull system where the employees in the assembly plants give out internal orders in the materials resource planning system for production of the automobiles in batches. The team has ensured that cases of stock-outs do not occur in the near future.