Strategic Capacity Planning Riordan

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Riordan Manufacturing
Riordan Manufacturing is a global plastics manufacturer and industry leader in the field of plastic injection molding with locations in Georgia, Michigan, California, and their most current expansion in 2000 to Hangzhou, China. The company manufactures plastic bottles, fans in all sizes, medical devices, and custom plastic parts. The market for plastic bottles, fans, and custom plastic parts is affected by economic conditions (University of Phoenix, 2010). Understanding the economic impact on Riordan's customers is crucial in determining the future direction of the company. The China plant is a make to stock operation that uses a forecasting method to determine future demand. The Department of Defense is a major customer for electric fans. As part of the government, they are affected more by funding and appropriations than by economic constraints. The current budget projected for 2010-2018 for discretionary spending for defense indicates a decrease from the current 6.7% to a projection of 2.3% (Congressional Budget Office, 2010) that would drastically affect production in China. This paper will focus on Riordan’s newest plant in Hangzhou, China by reviewing their strategic capacity planning and lean production for their new process design and supply chain process for the electric fans. Strategic Capacity Planning

Strategic Capacity Planning involves matching resource capabilities to the long-range strategy of the business (Chase, Jacobs, & Aquilano, 2006, p. 431). Whereas management must first look at how to determine capacity requirements, other factors to consider include economies of scale, the experience curve, and flexibility to changes in capacity. Capacity is the maximum level of output or the upper limit the plant can handle, for example, the number of fans produced in a single shift. To determine the sustainable rate for output, the concept of best operating level for which the process was designed and the volume of output...
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