Economics and Lead Time - 939 Words

CASE ANALYSIS FOLDRITE FURNITURE CO.: PLANNING TO MEET A SURGE IN DEMAND Submitted to: Submitted by: Dr. P. K. Dash Abhinav Anand Operations Management PGDM-BHU010 Case facts about FoldeRite Furniture:- * Established in 1987 * Throughout 1990s company grew organically. * 1999-2006 annual growth rate 3.5%. (More than market growth rate) but one competitor grew by 6% annually. * In 2006 company’s performance was very bad due to following concluded reasons- * Loss of productivity and yields caused by high labor turnover. * Cost of raw materials was increasing * Increasing proportion†¦show more content†¦The first option available was to ask the staff to work an extra shift. 2. Increase the staff temporarily to take advantage of idle production capacity. 3. Changing the designs of the cloud chair slightly to require one minute less in assembly 4. To increase the amount of inventory using a constant level of production. 5. The last option available with Kelsey was subcontracting part of work, such as the manufacture of seats for stackable chairs. Q2. What are the financial implications of the three options? How does it impacts the lead time? Wages of the Skilled workers is = 19 + 33% of 19 = 25.27 Wages of the Unskilled workers is = 9 + 10% of 9=9.9 Change Strategy In alstrong, the hiring cost would be zero for skilled and $2593.5 for unskilled labors. The layoff cost would be $327288 for skilled $349752 for unskilled labours In case of cloud chairs, the hiring cost would be zero for skilled and $633.6 for unskilled labours. The layoff cost would be $264342 for skilled $533520 for unskilled labours In case of green comfort, the hiring cost would be zero for skilled and $1662.5 for unskilled labours. The layoff cost would be $214058 for skilled $231270 for unskilled labors Subcontracting Strategy In case of cloud chairs, units subcontracted cost would be $720355.32. In case of alstrong, units subcontracted cost would be $46959.28. In case of green comfort, units subcontracted cost would be zero. The lead time will reduceShow MoreRelatedThe Creation Of A Canadian Infrastructure Development Bank745 Words   |  3 Pagesproduced by the economy while economic growth refers to rise in the market value of the commodities and services produced by the economy over time. Economic growth is usually measured as a percentage change in the real gross domestic product (GDP) (Jones 2014). This paper will explain how the creation of a Canadian Infrastructure Development Bank by the Canadian bank will lead to long run and short run economic growth. It is true that the call by the Morneau s economic growth council for the creationRead MoreThe Effects Of Post Olympic Games On The Olympics1118 Words   |  5 Pagesand consumers reduce in the Olympic host city and the economic markets shrink. 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