Mamita\'s expected a modest growth rate of 2% per year over the next five years.
ID: 432367 • Letter: M
Question
Mamita's expected a modest growth rate of 2% per year over the next five years. Mamita's was currently manufacturing at full capacity; to expand its capabilities, it needed an investment of $100,000 to rent additional real estate and purchase additional equipment Figure 3. Product ready for shipment at packing station. Source: Case writer. Page 4 of 5 UVA-OM-1418 PEF's Proposal Amacker performed an analysis of the process and found that a spiral freezer could automate the process of freezing the candy pouches; the appropriate linear density of a spiral freezer would be 20 candy pouches per foot. Cost for such equipment would be dependent on the spiral's belt length. PEF's spiral price was $550/foot. Amacker needed to present amita's plant manager with an executive summary of process improvement. Amacker believed that, with a properly designed spiral freezer, he could maintain freezing time and throughput rate, and Mamita's would be able to eliminate both the labor involved in step 4 of the process (racking and freezing) and the nced for more space and meet the five-year growth estimate within the current facility. He just had to prove it.Explanation / Answer
2)From the information provided, I would recommend to go ahead with process improvement plan because it is eliminating any extra space needed, labor and more importantly meeting the 5 years estimated demand with the current facility itself.
If amacker has properly analysed the process he would have cut down or have overcome all the unwanted or else time consuming task in it which would lead to increase in time and thereby increase in throughput. As after automating the process of freezing the candy pouches, the labor cost has been deducted on the expense of installing spiral belt at $550/foot. But this amount can be easily recovered with in a small period of time if the production volume is high and the production time is maximum/day.
3)Coming to recommendation part mamita’s should consider amackers process improvement plan as it maintains freezing time and throughput rate and even eliminates the labor involved in the step 4 of the process (racking and freezing)and the need is also fulfilled to meet the five year growth estimate with the modification in the current facility.
Mamita’s should cross check whether the analysis done by amacker is appropriate and feasible by duplicating it into any simulation software like ARENA or WITNESS.
It should compare the volume generated now and volume generated after modification of process and then compare with the investment done so that they could find which gives maximum profit.
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