Business Simulation Production Management Report Sample Essay

3351 Words Apr 14th, 2009 14 Pages
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|ACCT2106 |
|Business Simulation |
|Production Management Report-SPRING WATER COMPANY |
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In year 2, capacity purchased improved to 3000. Due to the sudden emergency loan we were granted in year 2, the marketing department requested that we try to reduce cost further to save funds for both similar situation and marketing decisions. By purchasing 12000 more capacity in year 3, we were able to produce a much larger number of products, as well as reducing marketing cost per unit: with the same number of advertisements, we could advertise for 12000 more products. Furthermore, with a capacity exceeding 27300, we can produce up to 15000 products per quarter, given that we can purchase just enough raw material for production, we can have a discount of 10% each purchase. To succeed in applying this strategy, we also could not neglect labor management, which I will present shortly below.

Labor decision: For this part, I tried my best to hire just enough workers for production every quarter. Every time we buy more capacity, more workers were hired so that we can produce at our maximum output without overtime. As a result, the capacity available chart looks very identical to the labor available chart. This shows how serious we are in allowing no useless labor cost, raw material warehouse cost or even unused capacity cost.

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Analysis of Capacity and Labor decision: During year 1 and year 2, the competition was not too intense so we decided to purchase little capacity

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