Production Planning at Parbold Products.

Added on - Sep 2019

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Production Planning at Parbold ProductsProblem OverviewParbold Products make a range of 3 kitchen appliances: a food processor, a toastie machine and a slowcooker. Sales have been good and the board of directors are looking at how to plan for the comingfinancial quarter. They wish to use quantitative modelling techniques to produce a production plan andresolve any production planning issues.Data for past sales can be found in the associated Excel file. Products are rarely out of stock and sodemand is assumed to be equivalent to sales.At the end of this quarter the company is expected to have about £500,000 to spend on productionduring the next quarter. The Head of Production has stated that this will be used to cover the totalproduction cost (i.e. a production budget) of the items produced for 2017 Q1. The Head of Sales hasstated that the company should borrow some money to increase this production budget as he believesit will not be sufficient to produce enough supply to meet demand.The production cost of each item is as follows:It is standard practice to produce a plan to try and meet the expected demand. Should demand exceedthis supply then extra production is implemented using overtime. This overtime is outside the scope ofthis analysis. The company have a policy of planningto meet at least 75% of expected demand in order maintain brand reputation. It is not clear to the Headof Analytics whether this should be interpreted as 75% of expected demand for each product or 75% ofoverall demand.The Chairman of the Board is interested in maximising sales revenue. This is to be the objective of thisstudy. The sales price of each product is as follows:
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