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Specialty Packaging Corporation

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Running Head: SPECIALITY PACKAGING CORPORATION Specialty Packaging Corporation Case study Specialty Packaging Corporation is a company that processes polystyrene resin into disposable containers that can be used in the food industry to package different kinds of foods. The management has been weighing on the options of storing their goods. The options are private warehousing or public warehousing.
Price established by the subcontractors will certainly influence the decision about the amount of private warehousing space that should be leased. This is because the company only has money to invest into each project depending on the subcontractor’s rates as well as the amount of work to be done thus the price will vary. Thus, if it appears that the subcontractor is charging more than expected, the rates of private warehousing space to be leased may have to decrease. However, this is not the only item Julie needs to consider. Julie must also consider how much space the company should lease. If she errs too much in either direction, she can hurt the company by either paying too much, or by not providing enough space. neither error will be helpful to the goals of the company. So, the needs of the company, as well as the pulls of the overall market will need to be considered when making this decision. Julie will need to examine trends of the company’s current market and current needs in order to assist her with making this decision (Groover, 2007, p. 787).
She must also consider how much space is really needed. Obtaining too much space will be a waste of money for the company and can thus detrimentally hurt the company. However, getting too little space will hurt the company because it will not give the company what it needs to solve its problems for the next two years. Therefore, Julie must try to get a strong estimate of how much space is really needed over the two year period. This is where potential error in the demand forecast will certainly come into play. She must be careful about this error forecast, as she needs to make sure she does not calculate too strongly one way or the other. Ideally, she may want to leave a bit of room in the calculations to fall either in the greater or lesser margin depending on how the company seems to be doing within this aspect of need. For instance, does the need seem to be increasing or decreasing at this time Determining what direction the need of the company is heading can hopefully help her reduce any margin for error in one direction or the other.
The Aggregate production planning refers to the planning method that involves planning the production output levels of product lines that should be produced by a firm. The plans are coordinated through using different functions of the firms such as product design, production, sales and marketing (Shim, amp. Siegel, 1999, p .231).

Extruders
Thermoforming Presses
total
N.o. of particulars
14
25
39
Processing capacity of each particular
3000 pounds per hour
2000 pounds per hour

Capacity loss
5%

Effective processing capacity
2850 per hours

Workers
6
25
31
Salary
$15
$15
$30
Overtime
150%(15)
150%(15)
45
Limit of overtime per quarter
60
60
120
Fixed cost of each particular per quarter
80,000
80,000
160,000
Training cost per worker
3000
$3,000
$6,000
Laying off workers
$2,000
2500
$4,500
Training cost for Re-use of idle extruders
$2,000

$2,000

$172,765

The demand forecast for the company for the next three years is.

Forecast

Black plastic forecast
Cum.demand forecast
Normal Prod. days
Prod. rate units/day

2007
I
6650
6650

ii
4576
11226

iii
6293
17519

iv
13777
31296

31296
63
496.7619048

2008
I
7509
7509

ii
5149
12658

iii
7056
19714

iv
15399
35113

35113
63
557.3492063

2009
I
8367
8367

ii
5721
14088

iii
7819
21907

iv
17021
38928

38928
63
617.9047619

Clear plast. forecast
Cum. Dd. forecast
Normal Prod. days
Prod. Hrs /employee
Prod. rate per unit
2007

I
7462
7462

ii
18250
25712

iii
8894
34606

iv
4064
38670

38670
63
504
613.8095238
2008

I
8349
8349

ii
20355
28704

iii
9891
38595

iv
4507
43102

43102
63
504
684.1587302
2009

I
9235
9235

ii
22461
31696

iii
10889
42585

iv
4950
47535

47535
63
504
754.5238095

2052.492

Hours worked by the employees =8

Clear plast. forecast
Cost of production
2007

I
7462

ii
18250

iii
8894

iv
4064
172765

2008

I
8349

ii
20355

iii
9891

iv
4507
172765

2009

I
9235

ii
22461

iii
10889

iv
4950
172765

129307
518295

Black plastic forecast
Cost of production

2007
I
6650

ii
4576

iii
6293

iv
13777
172765

2008
I
7509

ii
5149

iii
7056

iv
15399
$172,765

2009
I
8367

ii
5721

iii
7819

iv
17021
172765

105337
518295

References
Groover, M. P. (2007). Automation, production systems, and computer-integrated
Manufacturing 3rd ed. Upper Saddle River, New Jersey: Prentice Hall.
Shim, J. K. amp. Siegel, J. G. (1999) .Operations management .Wireless Blvd Hauppauge New
York: Barron’s Educational Series.