Good Essays
Prepared by Professor Nitin R Patel and Mr B. Anantaram.
Teaching material of the Indian Institute of Management, Ahmedabad, is prepared as a basis for class discussion. Cases are not designed to present illustrations of either correct or incorrect handling of administrative problems.
Copyright © 1979 by the Indian Institute of Management, Ahmedabad.

*Contribution = Average sales price - variable cost (mainly wages paid to weavers and yarn cost).
Indian Institute of Management QM 151

Planning The Product Mix at Panchtantra Corporation

Mr Ganesh, Project Director for the Kapadkunj Intensive Handloom Development (IHD) Project of the Panchtantra Handloom Development Corporation, was preparing the production plan for his project for the next month. The IHD project produced two types of handloom products - 60 x 40 lungis and 40 x 40 shirting. Every month, Mr Ganesh had to decide on the quantities of each of the products to be produced after taking into account the loom capacity available in the project, the availability of 40s and 60s yarn (both of which were procured and supplied to the project by the Corporation's centralized purchasing department) and information regarding sales from the Sales Department. Mr Ganesh expected around 3000 loom days of production capacity to be available to his project next month. Mr Kapasi, the purchase manager, had indicated that due to stringent market conditions, at the most 480 kgs of 60s yarn and 2400 kgs of 40s yarn would be available to the Kapadkunj project next month. The sales department of the Corporation had piled up adequate stocks of finished goods. Hence, the Sales Manager, Mr Bazari, did not want the production quantity to exceed the normal sales level of 11000 metres of lungis and 22000 metres of shirting.

So far, Mr Ganesh, had aimed at producing as much of lungis as possible (he had found the order booking for lungis by the sales department the main limitation to the quantity of lungis

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