MacPherson Case Study
Short Description
Operation Management. A group assignment for class discussion. Feel free to give us you r comment and rate....
Description
MM5004
MacPherson Refrigera0on Limited (MRL)
Syndicate 2 MBA Executive 46 29111311 29111328 29111329 29111338 29111344 29111384 29111387 29111393
Haidir Afesina Hendra Winata Mita Listyatri Andek Prabowo Aprian Eka Rahadi Chairunnisa Mirhelina Franciscus Xaverius Kresna P Agung Indri Pramano
Facts • MacPherson Refrigera0on Limited (MRL) established in Stra;ord, Ontario, Canada
• Linda Metzler has been appointed to be producon planning manager • MRL built 3, square foot plant in Stra;ord • Diversified into customer refrigera0on • Added air cond0oner to freezer and refrigerators line • Had sales ± $28.5 Million • Sold Hercules Brand via furniture and appliance store • The Straod Plant : Manufacturing changed in process design and assembly technology:
• Annual output increased from 240 to 450 appliances • Expected 480 appliances for next year
Issues Producon Forecasng 1. 2. 3.
Cost efficiency Employee motivation Unforeseen demand
Aggregate Producon Plan
Producon Gross Plan (Consisted producon by month of the year)
Master Producon Plan (Specific regarding appliance,worker appliance,work er type, model number, etc
The Strategy Alterna0ves FACTORS STRATEGY
CONSIDERATION
Producon Inventory Workforce Rate on Hand
+
‐ High cost Inventory
Level Strategy (Level Producon to Meet Peak Demand)
Constant
Hiring then constant
√
An0cipa0ng unforeseen demand Outdated inventoried product
Stable workforce & Variable work Fluctuate (Chase Producon Plan with (depends on Constant Workforce and demand) Overme)
Hiring then constant
No inventory holding cost
No reserves for an0cipa0ng unforeseen demand
Avoid effort of hiring and training worker
Lower efficiency
X Over0me
No reserves for an0cipa0ng unforeseen demand No Over0me
No inventory holding cost Employee demo0vated
Fluctuate Chase Strategy (Chase Producon (depends on Plan with Varying Workforce) demand)
X Hiring and Laying off
Produc0on efficiency
Limited labor market in Stra;ord High cost
Focus Problem Inventory
The Aggregate Plan
Overme
Hiring and Laying off
Cost efficiency for both of production and employee
- $8 per appliance (Holding cost) - 240 appliances (Last predicted) - 13,000 appliances (Max. capacity)
- $2400 per worker (Regular) - $3300 per worker (Overtime) - 160 workers (Last workforce) - 40 hours per week (Standard working hours)
- $1800 per worker (Hiring & training) training) - $1200 pe perr worker (Lay off) off)
Solu0ons Using mixed strategy (Level + Stable workforce & variable working hours + Chase)
+ Forecasng producon to ancipate unforeseen demand
= Meet demand with the lowest cost possible
AGGREGATE PLAN FOR MRL RECOMMENDATION ( Exhibit 4) Month
Dec
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
44 64 44
44 64 44
6 64 6
8 64 8
66 736 66
118 13 112 18 175 175 175 175 118 13 112 18
224
424
464
34
38
275
5
5
16
16
16
16
184 24
269 85
269
19 124 2146
x x x
$1,8 $1,2 $8
= = =
$195,75 $148,5 $171,68
2384
x x
$2,4 $3,3
= =
$5,721,6 $
Dec
TOTA L
Oct
Nov
76 76 76
6 6 6
2
21460
269
269
19 79
15 4
145 5
2384 109 124
0
Production Plan Shipment Forecast Produc0on Plan Shipments Inventory
24
56 95400 58 95360 56 95400
Extraordinary Labour Cost Number of Workers Hirings Layoffs Worker Months Over0me
16
Cost of Alternative Hiring Costs Layoff Costs Inventory Holding Costs Labour Costs Regular Over0me
TOTAL COST
$6,237,530
Conclusions PRODUCTION PLANNING STRATEGY ALTERNATIVES COST
Ex.1
Ex.2
Ex.3 Ex.3
Ex.44 Ex.44
UNIT
COST
UNIT
COST
UNIT
COST
UNIT
COST
Hiring Costs
51
$91,8
39
$7,2
256
$46,8
19
$195,75
Layoff Costs
$
$
276
$331,2
124
$148,5
Inventory Holding Costs
75
$6,
$
$
2146
$171,68
Regular Labour Cost
2532
$6,76,8
2388
$5,731,2
2379
$5,79,6
2384
$5,721,6
$
375
$1,237,5
$
$
Overme Labour Cost TOTAL
$6,768,600
$7,038,900
$6,501,600
$6,237,530
Total Cost is $6,237,43 with: ‐ 2 appliances in last inventory ‐ 145 workers for next year
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