Global Supply Chain Management Assignment: Fine Fruit Cake Co & Human Resource Inc

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GLOBAL SUPPLY CHAIN MANAGEMENT

Q2. FINE FRUIT CAKE COMPANY
A. Monthly and annual capacity for fine country fruit cake company. 1.Calculations
.
a.In calculating the monthly and annual capacity, the following assumptions have been made: •The Company works for five days each week
There are four weeks in each month
The opening stock of 100 cakes of each size on 1st of January is not considered while making the calculations

b.From the question, we know that all production is done in batches of 10 kg of only one size of cakes at a time. Therefore we can either have a batch of ten cakes of 1kg each or 5 cakes of 2 kg each. If we assume that the company can produce an average of 2 batches each of 1kg and 2kg cakes a day, we have the following production: Cake size (kg)Cakes/

batchBatches/
dayCakes/
dayKg/dayCakes/
wkKg/wkCakes/
monthkg/
Month
110 2 20 20 100 100 400 400
25 2 10 20 50 100 200 400
TOTALS30 40 150 200 600 800
The monthly and annual capacity is therefore presented in Table I below. Table I: Monthly and annual capacity of Fine Country Fruit Cake Company for the year 2011
MONTH
JanFebMarAprMayJunJulAugSepOctNovDecAnnual
1kg cakes4004004004004004004004004004004004004800 Weight4004004004004004004004004004004004004800
2kg cakes2002002002002002002002002002002002002400 Weight4004004004004004004004004004004004004800
Total cakes6006006006006006006006006006006006007200 Total weight8008008008008008008008008008008008009600

2.Comparison with actual sales for 2010 and forecast demand for 2012 This is presented in Table 2 below

YEAR OF PRODUCTION
201020112012 FORECAST
1 KG90048006000

2 KG195024003500

TOTAL4800720013000

From Table 2 above we note that:
The production of 1 kg cakes in the year 2011 far exceeded that in 2010 (more than 5 times), and it was also higher for production of 2 kg cakes, but by a much smaller margin. •The forecasted production in 2012 is even higher than the capacity for 2012, reflecting hence they the company will have to replan their capacity. This may be by increasing a shift or procuring extra oven

3.Use of the total weight (kg) of product as a measure of capacity Advantages:
While the company produces only a single type of product- cakes, the products are in a mixture of outputs (ie 1 kg and 2 kg cakes). An aggregate measure of capacity is therefore required in order to work with the different sizes/outputs of product, and the total weight of cakes provides a useful measure for this. •We already know that production of cakes is done in 10 Kg batches, and the products only vary with respect to weight- being 1 kg and 2 kg cakes. The total weight in Kg of output may therefore be considered as a good measure of capacity in this business. •The total weight of product is a simple, easily communicated and understood measure for describing maximum value of capacity; it can also be used to analyse the input of resources required.

Disadvantages
This measure of output assumes that the mix of 1 kg and 2 kg cakes remain the same (2 batches of each type of cake each day). However, 1 kg cakes require less baking time (3 hours compared to 4.5 hours for 2 kg cakes),and, under changing market conditions, a shift in production towards more 1 kg cakes would result in increased capacity despite there being no change in labour input or cost. In other words, the different production rates of the different products could result in changes in capacity. Therefore, under static situations of production, where standard products are produced cyclically, a total output measure of capacity such as total weight (kg) is a very useful measure. With increasing mix of products, it may become necessary to measure capacity in terms of labour...
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