OperaZeal

IIM Amritsar

Group no.- 23
HIMANSHU JHAMNANI
PRATEEK SACHAN
MAYANK MISHRA
KHARKATE NIHAL ARUN
PUNEET KAKKAR
KAUSHALENDER KUMAR
VARMA
 Approach to the Problem
• Increasing the production capacity

• To eliminate the bottleneck

• In-house production of raw material leading to:

• Reduction in premium

• Elimination of lead time

 Current Scenario
Production Actual
Number
Capacity Output
Machines of Efficiency
(tons/hour (tons/hour
Machines
) )
Pounding &
Squeezing 2 25 90 45

Fourdrinier
6 9 80 43.2

Pressing
5 8 95 38

Rolling
1 43 75 32.25

Cutting
7 5 83.5 29.225

Conclusion : Because of the bottleneck created by the cutting

machine, output is limited to 29.225 tons/hour limiting it to
204.575 tons/day (considering 7 hours work day)
 Proposed Scenario
Proposed Production Actual
Number Capacity Output
Machines Efficiency
of (tons/hour (tons/hour
Machines ) )
Pounding &
Squeezing 2+1 25 90 67.5

Fourdrinier
6+3 9 80 64.8

Pressing
5+4 8 95 68.4

Rolling
1+1 43 75 64.5

Cutting
7+9 5 83.5 66.8

Conclusion- Output Capacity increased from 29.225 to

64.5 tons/hour (451.5 tons daily output)
Assumptions and
Calculations
• Out of 204.575 tons of pulp per day, 175 tons is readily available at
Rs.290 per ton without any lead time and the rest has to be bought at
price of Rs.310 per ton.
• Current production of paper : 451.5 tons/day

In-house Total
Savings (in
Quantity Market Price Production Savings
Rs) per ton
Cost per year
175 290 288.59 1.4 73,500
276.5 310 288.59 21.41 17,75,700

• Savings per annum from in house production of pulp is Rs 18,49,200

 Warehousing
• Our current requirement of pulp per day is 451.5 tons.

• For 3 days, the total requirement is 1354.5 tons.

• Wooden chips required to make 1354.5 tons of pulp as per the given wastages
is 2475 tons.

• Estimated cost of setting up a warehouse is 1.5 crore rupees and its expected
life is 15 years resulting in a per annum depreciation of Rs 10 lakhs.

• Out of the total savings of Rs 18,49,200 , rupees 10 lakhs are spent on the
depreciation of the warehouse, resulting in a final savings of Rs 8,49,200
Recommendation
• We propose to install new machines to eliminate the bottlenecks and
increase the production from 204.575 tons/day to 451.5 tons/day

• We propose to set up a new plant and a warehouse resulting in a savings

of Rs 8,49,200 per annum
 Mentor Profile
• Name - Kuldeep Thakuriya
• Roll no.- PGP04/068
• Email ID – kuldeept04@iimamritsar.ac.in
• SIP Company – Bharat Petroleum marketing research impact