Explain the circumstance under which Martinez should employ each of the two manufacturing methods.

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Martinez can choose between two different manufacturing processes: the traditional method of manufacturing, which requires labor and a significant upfront investment to purchase new equipment, but allows for production on demand. The modular method is more cost-effective, but it requires additional organization in the supply chain.

Reduced setup costs would make it easier to produce products in small quantities or with short lead-times. Martinez may also choose the traditional method if they need to customise production to meet customer needs.

If Martinez, on the other hand has larger orders and longer lead times they might want to consider the modular manufacturing approach. This would allow them to maintain cost-efficiency by using off-the shelf components from different suppliers while also better controlling inventory. This method can reduce both the supply chain’s complexity and costs of storing products to be shipped later.