Should the company consider a proposal to adopt level monthly production instead of doing the seasonal production of toy? Objective:
To determine the optimal production schedule and lessen the cost of production while minimizing other additional costs. To meet the required number of toy supplies needed during its peak season without increasing its cost. Alternatives:
•Do not change the production schedule. Stick with the current set up of highly seasonal production schedule. •Agree to do the level monthly production.
We recommend considering the proposal of adopting the level monthly production due to the following reasons: •The company can ensure that the quality of the toys will not suffer since there will be enough time to do quality checks. Thus, strengthening the brand name of the company which is good in a highly competitive business. •The company will not need to do mass hiring and training at the same time during peak seasons. •The company will not be forced to require employees to render over time which will also result to a high salary cost. They can hire contractual employees which only work with certain parts of toys to avoid over training employees. Instead of spending money on overtime they can use it to hire more employees. •Delays in the delivery of orders due to insufficient stocks will be avoided since the company has enough stocks produced during the off peak season. •Equipment and Machinery breakdowns will be avoided as those will not be used beyond its normal capacity in a day. •It is assumed that prices of raw materials for toys will also be at its peak during the peak season of toy production, the company can buy their raw materials during off peak season and then proceed with production sooner rather than later. Therefore, the company can lessen their purchases of raw materials during the peak season, thus lessening their costs. •Production will be more organized, will have...