Operations Management: An Integrated Approach, 5th Edition

CASE: Hightone Electronics, Inc.

George Gonzales, operations director of Hightone Electronics, Inc. (HEI), sat quietly at the conference table overlooking the lobby of the corporate headquarters office in Palo Alto, California. He reflected on the board meeting that had just adjourned and the challenge that lay ahead for him. The board had just announced their decision to start an Internet-based division of HEI. Web-based purchasing in the electronics industry had been growing rapidly. The board felt that HEI needed to offer online purchasing to its customers in order to maintain its competitive position. The board looked to George to outline the key operations management decisions that needed to be addressed in creating a successful Internet-based business. The next board meeting was just a week away. He had his work cut out for him.

Hightone Electronics, Inc. was founded in Palo Alto, California over 50 years ago. Originally, the company provided radio components to small repair shops. Products were offered for sale through a catalog that was mailed to prospective customers every four months. The company built its reputation on high quality and service. As time passed, HEI began supplying more than just radio parts, adding items such as fuses, transformers, computers, and electrical testing equipment. The expansion of the product line had been coupled with an increase in the number and type of customers the company served. Although the traditional repair shops still remained ...