Resource Utilization in Production Planning

This report examines the level to which Jungle Furniture Limited maximizes on the resources at their disposal and gives recommendations on how to improve the utility created by these resources.

PRODUCTION PLANNING
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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 1,78
0
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

This report examines the level to which Jungle Furniture Limited maximizes on the
resources at their disposal. The firm has limited access to the best quality timber for the
manufacturing of furniture. They are also faced with the refusal of workers to work for over 40
hours in a week as we as overutilization of the available machines. The report comments on the
degree of resource utilization in the firm and gives recommendations on how to improve the
utility created by these resources. At times, the delayed supply of raw material from the sole
supplier results in delayed production and increased cost of production. This does not favor the
shareholders in the firm. The main objective is to ensure the firm enjoys maximum profits at the
most minimal cost. This is the universal objective of any business outfit (Wenders, 2016). The
management has also noted the lapses in production and forecast and is pushing to create more
efficient systems. The staff members feel overwhelmed and are no longer willing to work extra
hours. This in return has a negative effect on their productivity. In the long run, this can result in
some orders by customers not being delivered on time to delayed assembling. The machines
available are also overworked, thus lowering their productivity.
These factors prompt the need to review strategies to ensure the best results are drawn from
the available resources. New strategies ought to be adopted to realize this.
ii) Resource utilization formulae
There are two main formulas used to evaluate the utility of the available resources. They
include;
Utilization (U) = Resources used
Avaliable resources ∨Utilization ( U ) = Rate of Demand
Number of servers∗Service r ate
From this formulae, it is evident that the parameters that determine the utilization levels include
the quantity and type of resources available, the value of resources used in the firm, the rate of

demand to the products, the number of staff members involved in the value chain and the service
rate for either the machines or the staff members.
iii) Recommendations
a) The management should seriously consider the mass purchase of timber. It should,
however, continue buying most of the raw material in random lengths because of the cost
implications.
b) The company should invest in buying machines with higher service rates. This might be a
huge initial expense, but in the long run, it lowers the cost of production and results in
improved quality of furniture produced. The overall effect will be the retention of
customers, thus increased sales.
c) Mass production should be encouraged. Furniture is not perishable, therefore there is no
harm in producing them in larger batches and intensify marketing techniques to increase
sales. The company then enjoys the benefits of economies of scale.
d) The management should invite more suppliers to bid for supplying timber in order to
make the process a bit competitive. This will enable them to get better services and fair
prices.
e) There should be attractive incentives to staff members as a reward for working extra
hours. This will give them the motivation to work to strive to be very productive even if it
means working extra hours. Human beings naturally love to be appreciated. Also, the
introduction of another shift is an option worth considering.
f) The management can also consider hiring part-time workers who shall be called in should
there be excess orders that cannot be attended to by the current staff members and
delivered in a timely manner.

Conclusion
Of all the options available for JFL, I would strongly recommend the adoption of
three main strategies. Their focus should be on the execution bi as a means of
maximizing utility. To start with, it would be wise to introduce a new shift. This would
reduce burn out to staff members, thereby increasing their productivity. The business
would also operate for longer hours than it is currently. Staff should also be given
adequate training to make them more effective.
Additionally, the firm should consider buying new machines. This is to avoid
over-exploitation of the machines available. His will also cater to the new staff members
coming in if they introduce a new shift. The machines should also be of better quality.
Lastly, JFL should source for alternative suppliers of timber. This strategy would
minimize cases of delayed delivery of raw materials, a vice that has led to delayed
production and higher costs of production to the firm in the past.
References
Burke, R. (2013). Project Management: Planning and Control Techniques. New Jersey, USA.

Wenders, J. T. (2016, January 06). What Is Profit Maximization? Taylor and Francis Online, 6-
1972(2-3), 61-66. doi:10.1080/00213624.1972.11503029