Specialty Packaging Corporation - Case Study Example

Running Head: SPECIALITY PACKAGING CORPORATION Specialty Packaging Corporation Case study Specialty Packaging Corporation is a company that processes polystyrene resin into disposable containers that can be used in the food industry to package different kinds of foods. The management has been weighing on the options of storing their goods. The options are private warehousing or public warehousing. Price established by the subcontractors will certainly influence the decision about the amount of private warehousing space that should be leased.

This is because the company only has money to invest into each project depending on the subcontractor's rates as well as the amount of work to be done thus the price will vary. Thus, if it appears that the subcontractor is charging more than expected, the rates of private warehousing space to be leased may have to decrease. However, this is not the only item Julie needs to consider. Julie must also consider how much space the company should lease. If she errs too much in either direction, she can hurt the company by either paying too much, or by not providing enough space; neither error will be helpful to the goals of the company.

So, the needs of the company, as well as the pulls of the overall market will need to be considered when making this decision. Julie will need to examine trends of the company's current market and current needs in order to assist her with making this decision (Groover, 2007, p. 787). She must also consider how much space is really needed. Obtaining too much space will be a waste of money for the company and can thus detrimentally hurt the company. However, getting too little space will hurt the company because it will not give the company what it needs to solve its problems for the next two years.

Therefore, Julie must try to get a strong estimate of how much space is really needed over the two year period. This is where potential error in the demand forecast will certainly come into play. She must be careful about this error forecast, as she needs to make sure she does not calculate too strongly one way or the other. Ideally, she may want to leave a bit of room in the calculations to fall either in the greater or lesser margin depending on how the company seems to be doing within this aspect of need.

For instance, does the need seem to be increasing or decreasing at this time Determining what direction the need of the company is heading can hopefully help her reduce any margin for error in one direction or the other. The Aggregate production planning refers to the planning method that involves planning the production output levels of product lines that should be produced by a firm. The plans are coordinated through using different functions of the firms such as product design, production, sales and marketing (Shim, & Siegel, 1999, p .231). Extruders Thermoforming Presses total N.o. of particulars 14 25 39 Processing capacity of each particular 3000 pounds per hour 2000 pounds per hour Capacity loss 5% Effective processing capacity 2850 per hours Workers 6 25 31 Salary $15 $15 $30 Overtime 150%(15) 150%(15) 45 Limit of overtime per quarter 60 60 120 Fixed cost of each particular per quarter 80,000 80,000 160,000 Training cost per worker 3000 $3,000 $6,000 Laying off workers $2,000 2500 $4,500 Training cost for Re-use of idle extruders $2,000 $2,000 $172,765 The demand forecast for the company for the next three years is; Forecast Black plastic forecast Cum.

demand forecast Normal Prod. days Prod. rate units/day 2007 I 6650 6650 ii 4576 11226 iii 6293 17519 iv 13777 31296 31296 63 496.7619048 2008 I 7509 7509 ii 5149 12658 iii 7056 19714 iv 15399 35113 35113 63 557.3492063 2009 I 8367 8367 ii 5721 14088 iii 7819 21907 iv 17021 38928 38928 63 617.9047619 Clear plast. forecast Cum. Dd. forecast Normal Prod. days Prod. Hrs /employee Prod. rate per unit 2007 I 7462 7462 ii 18250 25712 iii 8894 34606 iv 4064 38670 38670 63 504 613.

8095238 2008 I 8349 8349 ii 20355 28704 iii 9891 38595 iv 4507 43102 43102 63 504 684.1587302 2009 I 9235 9235 ii 22461 31696 iii 10889 42585 iv 4950 47535 47535 63 504 754.5238095 2052.492 Hours worked by the employees =8 Clear plast. forecast Cost of production 2007 I 7462 ii 18250 iii 8894 iv 4064 172765 2008 I 8349 ii 20355 iii 9891 iv 4507 172765 2009 I 9235 ii 22461 iii 10889 iv 4950 172765 129307 518295 Black plastic forecast Cost of production 2007 I 6650 ii 4576 iii 6293 iv 13777 172765 2008 I 7509 ii 5149 iii 7056 iv 15399 $172,765 2009 I 8367 ii 5721 iii 7819 iv 17021 172765 105337 518295 References Groover, M. P. (2007).

Automation, production systems, and computer-integrated Manufacturing 3rd ed. Upper Saddle River, New Jersey: Prentice Hall. Shim, J. K. & Siegel, J. G. (1999) .Operations management .Wireless Blvd Hauppauge New York: Barron's Educational Series.