Topics: Inventory, Costs, Employment Pages: 6 (1060 words) Published: November 19, 2013

Case Analysis on
Macpherson Refrigeration Limited

Submitted by

The role of the responder
Linda Metzler the production planning manager is the main responder in this case, she has to come up with another optimal alternative that will have to be submitted to the plant’s General Manager. The plan has to be approved by the general manager for roll out starting next year. Key Issues

In order to achieve excellent production capacity and reducing the overall costs the production manager has to find an optimal structure of aggregate planning which will help achieving qualitative and quantitative aspects of the organization. There is an issue which covers the trade union led labour force and laying off might be an offspring to many other issues. It is important to find the most feasible solution to satisfy the organizational as well as the individual goals. The limited amount of skilled labour available in the market to do this function also adds up to the issues list and not to forget the cost involved in training new employees The main problems include the responsiveness to demand that is to have enough safety stock in case of sudden increase in demand, using as less overtime as possible to reduce fatigue caused due to over working and last but not the least having quality products to meet customer demands

Responsiveness to demand and employee participation:
It is understood that MRL has to develop a plan that considers the time within which they can respond to peak demand. It is important to have enough workforce to meet the peak demand. It was also important to meet the regular flow of demand every month. It is also important to meet the expectations of the employees without laying off and employing them to do too much overtime. The strategies and the plans adopted have led to higher costs in certain cases with regards to holding inventory, hiring and firing which will induce lower morale among employees and using a chase strategy where there is a chance of stock out which will lead to losing out to competitors on account of sales if there is a sudden increase in demand. The table in Appendix 1 will give us a clear picture about the various levels at which the strategy might affect the production The level strategy can be described with the diagram below

Chase strategy:

Chase strategy with varied work force levels:
This may be cost efficient but it involves a lot of hiring and firing that might leave the employees unhappy and this might lead to production issues. The cost factor in this strategy is soothing to the company itself as it helps in reducing a huge amount of cost when compared to the other two strategies. The human resources which is the greatest asset of every company is affected in this strategy. It is important that the management looks into this factor more carefully when devising production plans Comparing the three exhibits (Appendix II) the chase strategy with varied work force seems to be more cost effective but with varying levels of work force the management might have to face unhappy employees and it does not portray a good image about the company.

The method used to calculate this alternative is using the trial and error method, involving various production planning alternatives and employing the best approach possible. The aspects considered while choosing this alternative are the cost factor, ease of implementation, Productivity, reduced idle time, employee satisfaction, customer satisfaction, quality of goods and safety stock Table 1:

Table 1 shows the breakdown of the costs involved in this alternative, there is a huge saving with regards to the total costs, although there is hiring and layoffs and overtime costs involved. This alternative was made to reduce the total costs and reduce frequent hiring and layoff. The alternative focuses on maintaining a decent level of safety stock in order to meet sudden rises in...
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