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Thanks for your tutorial on productivity and what must be the economics of plant operation and cost analysis. If someone had done that two dozen years ago, no telling how far I'd have gone. I'll print it out and read it every two days until it sticks in my mind. Who says you can't teach an old dog new tricks! Total units out divided by total cost to produce them is the honest way to define productivity. I would imagine, though, that capturing total cost might be tricky and require a value for depreciation and other figures derived from an accountant's calculation. Perhaps what I was using, total sales vrs number of employees, is an easily obtained number that might be considered a measure of productivity. At any rate, thanks for correcting my mistake.
Some of your response touched on the danger of making factory inputs too quickly. As you said, the ramp of the C6 in Oregon has to begin carefully, and output must be restricted in case any bugs are found in the product. Mistakes at this stage can be very costly in dollars and time. One just like that found in the Pentium was reputed to cost Intel more than $600M. Moreover, whenever possible, the practice is to build to orders rather than forecasts. Fabrication and release of a complex new microprocessor product such as the C6 is an expensive and tricky business. When the Oregon fab is able to process .25 micron technology and can also build the C6+, which IBM can now do, IDTI will be able to approach first tier PC manufacturers with expectations of getting orders. The subsequent ramping up of volume and improving yields allows for more efficient manufacture and better profit margins. My guess, and my hard-earned cash, says IDTI will be able to do it successfully. |
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