Resource Utilization in Production Planning

PRODUCTION PLANNING
Name of Student:
Name of Institution:
Date:

Scenario 1
Month 0 1 2 3 4 5 6 Total
Forecast sales - 76 68 88 109 90 69 500
Projected stock on hand 100 224 156 268 159 69 0 0
Production schedule - 200 200 -
Workers required - 10 10 - - - - -
Holding costs @$5 per unit - 1,120 780 1,340 795 345 0 0
Machine set up costs - 1000 1000 - - - - 0
Scenario 2
Month 0 1 2 3 4 5 6 Total
Forecast sales - 76 68 88 109 90 69 500
Projected stock on hand 100 424 356 268 159 69 0 0
Production schedule - 400 - - - - - 0
Workers required - 20 - - - - - -
Holding costs @$5 per unit - 2,120 1,780 1,340 795 345 0 -
Machine set up costs - 1000 - - - - - 0
Comments

The total holding costs would be higher in scenario two as compared to scenario one. The
total number of workers required for both scenarios is 20, therefore chances are the wage bill is
equal for both. The machine set up cost is however higher in scenario one as compared to
scenario two. This is because, for scenario one, the production is done in two major rounds, each
costing $1000 for machine set up. For scenario two, production is done one and it only costs
$1000 for machine set up.
In general, it costs less to produce furniture using scenario one. In order to maximize profits and
minimize the cost of production, scenario one would be more favorable to Jungle Furniture
Limited. Therefore, it is only prudent that the management adopts scenario one over scenario
two.
Resource Utilization
The main objectives of resource management are to maximize profits to the stakeholder
and minimize the cost of production as much as possible. To achieve this, the management of
JFL ought to ensure maximum utilization of the machines and equipment available, the staff
members available, and the facilities at hand. As this is done, adequate information and technical
skills should be availed to staff members. However scarce or plenty of the resources are, it is
important to maximize and get the best out of it. This, together with proper resource allocation
are major determiners of the success of any project. This is the objective of any business (Burke,
2013)
i) Problem Identification