DISCUSSION

LEVEL:
Demand for the first four months were extracted from the secondary research
(interview) conducted. Then 3 months moving average was used as a forecasting
method to determine forecasted demand for the remaining 8 months. Next cumulative
demand was calculated after which peak demand was determined. The highest value
58.1375million cases was to be used as the constant production throughout these 12
months. However to further reduce costs, 51million was used as the constant
production throughout the 12 months as it generated less carrying cost. Beginning
inventory was 2.88million cases while labor cost per employee is Rs13,500/-. Total
number of employees are 512 and production per employee per month is 0.113million
or 113000/- found by dividing the total production with total employees.
Backordering cost and carrying cost per case are Rs0.77, Rs0.5/- respectively. The
excel file attached shows a clearer view of all the calculations taking place. The total
cost incurring annually whilst using level is Rs102.14575million which is the highest
cost amongst all three strategies.

CHASE:
The total number of workers was 512. After determining the number of workers
needed each month, number of hired or fired workers is determined and their
constituting costs are calculated. The total annual cost is Rs77.325584million which is
the lowest strategy amongst all three strategies.

HYBRID:
Capacity in terms of cases per month is 58.125million which leads to capacity of 514
employees. No overtime cost is needed as no employee is needed to work overtime
instead around 56 employees in a year constitute to idle cost.
Total annual cost of hybrid strategy is Rs83.268million.