FoldRite Case

OM-II

Section-B
Group-1
Indrajeet Kumar

149278102

Amit Mishra

149278096

Nilay Kumar

149278096

Jaiesh Kumar

149278096

Prashnat Tataskar

149278096

Chase strategy
Using Overtime
Working hour per day=10
Wages (Skilled) = 19 *1.33 = 25.27 per hr
Wages (Unskilled) = 9*1.1=9.9 per hr
Production requirement = Demand forecast
Production hours required (skilled) = Demand forecast * Time taken to produce
one unit /(60*0.95)
Production hours required (unskilled) = Demand forecast * Time taken to produce
one unit/(60*0.95)
Works required = Production hours required / Hours per month per worker
Normal wages = Production Hours Required (Skilled) * 27
+Production Hours Required (Unskilled) *9.9
From calculation for number of labours required, we obtained following
results for the products:
Skille Unskill
Annual
Skilled
unskill
d
ed
Volume
Workers
ed
worker
s
CloudChair
2
9
524280
9
40
AlStrong
12.8
28
306916
33
72
GreenComfo
13
31
253570
28
66
rt
Calculation for CloudChair:
Janu
ary

Febr
uary

Mar
ch

April

May

June

July

Aug
ust

Demand
Forecast(Daily)
Production Days
in month
Demand
Forecast(monthly)
Production Hours
Required(Skilled)

280

100
0
15

250
0
18

410
0
18

435
0
15

440
0
18

480
0
18

395
0
17

738
00
258
9.47
4
162
0
116
52.6
3
720
0

652
50
228
9.47
4
135
0
103
02.6
3
600
0

792
00
277
8.94
7
162
0
125
05.2
6
720
0

864
00
303
1.57
9
162
0
136
42.1
1
720
0

3400
0
1192
.982

144
0
707.
368
4
640
0

450
00
157
8.94
7
162
0
710
5.26
3
720
0

671
50
235
6.14

Production Hours
Available (Skilled)
Production Hours
Required(UnSkille
d)
Production Hours
Available
(Unskilled)
Additional Hours
Required(Skilled)

150
00
526.
315
8
135
0
236
8.42
1
600
0

153
0
106
02.6
3
680
0

1530

Additional Hours
Required(UnSkille
d)
Total Additional
Hours Required

969.
473
7
445
2.63
2
542
2.10
5

939.
473
7
430
2.63
2
524
2.10
5

115
8.94
7
530
5.26
3
646
4.21
1

141
1.57
9
644
2.10
5
785
3.68
4

826.
140
4
380
2.63
2
462
8.77
2

16
448
0
157.
193

Sept
emb
er
2000

Octo
ber

Nove
mber

Dece
mber

150
0
18

900

900

16

14

270
00
947.
368
4
162
0
426
3.15
8
720
0

1440
0
505.
2632

1260
0
442.
1053

1440

1260

2273
.684

1989
.474

6400

5600

17

5368
.421
6800

Overtime
Wages
Normal Wage
Raw material
Cost
Total Cost

10975.
21
52550.
4
63525.
61

36747.
37
17595
0
21269
7.4

11024
2.1
52785
0
63809
2.1

10286
9.5
18079
7.1
86567
4
11493
41

99504.
83
15985
1.1
76538
2.5
10247
38

12271
3.1
19402
6.1
92901
6
12457
55

14917
1.2
21166
4.8
10134
72
13743
08

87783.
93
16450
5.7
78766
9.5
10399
59

83294.
04
39882
0
48211
4

66145.
26
31671
0
38285
5.3

35277.
47
16891
2
20418
9.5

30867.
79
14779
8
17866
5.8

Total cost calculation:

Similarly, calculation for other two products
are following:
CloudCha
ir
Production Hours
Required(Skilled)
18396
Production Hours Available
(Skilled)
18000
Production Hours
Required(UnSkilled)
82781
Production Hours Available
(Unskilled)
80000
Additional Hours
Required(Skilled)
5306
Additional Hours
Required(UnSkilled)
24305
Total Additional Hours
Required
29611

were done and final results obtained

Overtime Wages

562042

Normal Wage

1284394

Raw material Cost

6149804

Total Cost

7996241

AlStro
ng

GreenCo
mfort

68921

57832

66000

56000

150766

137906

144000

132000

Total
14514
9
14000
0
37145
3
35600
0

6970

4067

16342

15473

10767

50545

22443

14833

493958
323422
7
152537
25
18981
911

314032

66887
13700
33
73453
04
34142
886
42858
223

2826683
12739357
15880071

Total cost=42858223
Using Subcontracting

CloudChair
AlStrong
GreenComf

Annua
l
Unskill Volum
Skilled ed
e
52428
2
9
0
30691
12.8
28
6
13
31 25357

No.of
Skilled
Worke
rs

No of
unskill
ed
worker
s

40

2.33

2.796

14.06

33
28

72
66

10.01
10.59

12.012
12.708

59.71
60.83

Per
Unit
Labou
r Cost

SubContrac
ted Per Unit
Labour Cost

Per
Unit
Total
Cost

ort

CloudCha
ir
Janua
ry
0

Febr
uary
381
87

Marc
h
631
87

Apri
l
661
87

May

June

July

403
87

1513
7

Demand
Forecast(Dail
y)
Production
Days in
month
Demand
Forecast(mo
nthly)
Production
Hours
Available
(Skilled)
Production
Hours
Available
(Unskilled)
Actual
Production(m
inimum of
skilled and
unskilled)
Ending
Inventory

280

100
0

250
0

410
0

435
0

16

15

18

18

4480

150
00

450
00

1440

135
0

6400

Subcontracte
d Units
Subcontracte
d Cost
Normal Wage

Beginning
Inventory

Total Cost

4400

1606
3
4800

Augu
st
5446
3
3950

Septe
mber
7627
9
2000

Octo
ber
6494
5
1500

Nove
mber
4394
5
900

Dece
mber
1567
8
900

15

18

18

17

17

18

16

14

738
00

652
50

7920
0

8640
0

6715
0

3400
0

2700
0

1440
0

1260
0

162
0

162
0

135
0

1620

1620

1530

1530

1620

1440

1260

600
0

720
0

720
0

600
0

7200

7200

6800

6800

7200

6400

5600

4266
7

400
00

480
00

480
00

400
00

4800
0

4800
0

4533
4

4533
4

4800
0

4266
7

3733
4

3818
7

631
87

661
87

403
87

151
37

5998
98.02
5998
98.02

562
400
562
400

674
880
674
880

674
880
674
880

562
400
562
400

5446
3
5446
3
1522
78.5
6748
80
8271
58.5

7627
9
7627
9
2132
76.1
6373
96
8506
72.1

6494
5
6494
5
1815
86.2
6373
96
8189
82.3

4394
5
4394
5
1228
70.2
6748
80
7977
50.2

1567
8
1567
8
4383
5.69
5998
98
6437
33.7

9056

1606
3
1606
3
4491
2.15
6748
80
7197
92.1

0
0
5249
16
5249
16

By calculating for other two products finally we get;

Yearly Total Cost (CloudChair)
=8257463.068
Yearly Total Cost (Alstrong)
=18995342.66
Yearly Total Cost (GreenComfort)=15541456.7

Total Cost (Subcontracting)

= 42794262.43

Total cost in case of subcontracting is less. Therefore in chase strategy

subcontracting should be used for production.

Level Strategy
Calculations of additional hour required obtained from overtime analysis is used
to find out additional labour for hiring to keep level.

Additional Production Hours

CloudCh AlStro GreenComf

air
ng
ort
5306
6970
4067

required(Skilled)
Additional Workers Required (Skilled)
Additional Production Hours
required(UnSkilled)
Additional Workers Required (UnSkilled)
Total Additional Skilled Workers
Required
Total Additional Skilled Workers
UnRequired

24305
29

15473
13

10767
8

16
50