Mcpherson Case Study

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[Type the company name] | MACPHERSON REFRIGERATION LIMITED | Assignment #2 | | | | EXECUTIVE SUMMARY To: Tracey Lopers; President MRL From: Linda Metzler Subject: Aggregate production plan Issue: As you know a well done aggregate production plan is important in planning our resources so we have analyzed the work done thus far and would like to present the following problem statement for this requirement. Linda Metzler has to create and aggregate production plan that satisfies customer orders in times of seasonal fluctuation which also effectively manages employees to meet the strategic needs of the company. We considered the various options to conclude the assignment as follows: * Level production and workforce plan * A chase strategy using overtime in peak months * Varying workforce levels to meet customer orders Although these were viable, we feel that our proposed production plan will provide the best strategic solution for MRL, while also achieving a much better long term solution. Through the 12 month plan, we were able to reduce costs from the lowest plan proposed at $6,501,600 to $6,306,360 producing 1,200 units more. This reduced the costs per part from $68.32 to $65.45. We were able to achieve this through minimizing the amount of hiring/firing costs, and avoiding overtime costs as these were large costs. As with most companies, benefits don’t start until at least a 3 month probationary period has been completed. Using this information we were able to calculate the actual wage per new hire, assuming they would be paid at $10.50. Without paying fringe benefits, union dues, etc. to the new hires, we were able to reduce the total costs by $36,720 for the plan in the year coming. We would hire 51 new employees at the beginning of the year, and as soon as possible, taper off back to our original workforce of 160
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