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Operations Management case study. Kool King. The main problem that the company faces is the fluctuation in demand over the course of an year which presents a problem during the planning of production. Due to which, the company has to now decide which str

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Introduction

Operations Management - I Kool King (A) 5th Sept 2011 Submitted by: Group 3 Akshay Pasricha Bhrigu Raj Kshitij Agrawal Naresh Unhale Riya Ghosal Bhavya Amulya S. Shankar Executive summary: Kool king was a division of TIA (Television Industries of America), it expanded its line through acquisition to include room air conditioners and central cooling system. Kool king division was associated with the room air conditioner business , it produced seven model lines of air conditioners as given below: Chassis Series Cooling capacity (BTU) Voltage Rating Midget 4000 115 Slim line 5500 115 Mighty-Midget 6000 115 Breeze Queen 9300 208 Breeze King 11000 208 Islander 17000 230 Super 24000 230 Kool king division employed 150 people, out of which 112 were paid on an hourly basis and remaining 38 employees had a fixed salary. Problem The main problem that the company faces is the fluctuation in demand over the course of an year which presents a problem during the planning of production. ...read more.

Middle

months based on the shipment data available for 1979 as that represents the actual quantity demanded for a particular month in 1979. Month Cumulative Shipment as percentage of total Cumulative Demand (labour-hours) Monthly Demand (labour-hours) Production needed (with opening stock) September 0.64 1,920.40 1,920.40 -14,728.01 October 7.26 21,784.57 19,864.17 2,568.08 November 10.24 30,726.45 8,941.88 4,692.68 December 14.66 43,989.24 13,262.78 6,835.21 January 20.42 61,272.86 17,283.63 8,924.89 February 29.37 88,128.50 26,855.64 11,913.35 March 36.31 108,952.88 20,824.37 13,186.35 April 52.45 157,383.04 48,430.17 17,591.83 May 68.71 206,173.29 48,790.24 21,058.32 June 83.04 249,172.32 42,999.03 23,252.39 July 99.26 297,842.53 48,670.22 25,563.10 August 100.00 300,063.00 2,220.47 23,617.88 The graph below shows the variation of cumulative demand for different months of the year. Required production for a particular month has been obtained using an opening stock of 6189 units. Required Production = (Cumulative Demand - 6189*2.69) / Month Number The figure below shows the variation of required production along the course of the year. ...read more.

Conclusion

Total Labour cost = $1,800,000 There is a lot of hiring of new workers involved which comes with a cost of $284.50 per new worker so the hiring cost is going to be pretty high. As it is the labour cost in case of demand chase is more than that in level production in addition to which there is a high hiring cost due to which it is not feasible to go with the demand chase strategy. Conclusion Having performed the numerical analysis, we find that there is a significant cost involved in the demand chase strategy with the hiring of new workers. Though comparatively, the level production strategy has a lower cost associated with it but even in that case the labour usage is pretty less. Therefore, we suggest that it is best to use a hybrid strategy wherein we use the level production strategy until July and then resort to the demand chase strategy after July. This way we would be able to get the benefits of both the strategies. ?? ?? ?? ?? ...read more.

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