Revenue and Production
BERGERAC CASE STUDY
Summary
The purpose of this report is to analyze the opportunity to produce plastic components for cartridge production and choose the best alternative. It is predicted that the annual demand growth is a triangular distribution with a minimum of 5%, most likely of 17% and a maximum of 25%. Due to the continuous growth in the demand, the alternatives cannot be compared using just the data for 2010. An analysis is carried out for the time period 2011 to 2015 and the present worth of the net income is considered as the criteria to select the alternative. The analysis basically can be divided into 5 steps: * Forecasting demand for next five years, * Estimating capacity required, * Developing production strategy, * Calculate the operating expenses for the alternatives, * Select the alternative based on the present worth of net income.
From the estimated installed base of 7500 OmniVue instruments at the end of year 2010, the demand for the OmniVue instruments and cartridges are forecasted. There is a new product OmniVue mobile, ready to be launched in year 2013. It is assumed that the OmniVue mobile can be accounted for 30% of the demand for Instruments in year 2013, 50% in year 2014 and 60% in year 2015. The growth in demand for the OmniVue instrument is assumed to decrease after the release of OmniVue mobile.
It is estimated that the production capacity of Bergerac to produce OmniVue instruments is approximately 2000 units per year with a production of 5 days per week. It is inferred that using level strategy, the probability that the demand is not met in the next five years is 5.74%. There is no need to increase the capacity of the production line apart from changes required when the OmniVue mobile is released.
There are various strategies which are compared in build option. For each production strategy, the optimum solution for the capacities in each year is found out. After finding the optimum solutions, the
Summary
The purpose of this report is to analyze the opportunity to produce plastic components for cartridge production and choose the best alternative. It is predicted that the annual demand growth is a triangular distribution with a minimum of 5%, most likely of 17% and a maximum of 25%. Due to the continuous growth in the demand, the alternatives cannot be compared using just the data for 2010. An analysis is carried out for the time period 2011 to 2015 and the present worth of the net income is considered as the criteria to select the alternative. The analysis basically can be divided into 5 steps: * Forecasting demand for next five years, * Estimating capacity required, * Developing production strategy, * Calculate the operating expenses for the alternatives, * Select the alternative based on the present worth of net income.
From the estimated installed base of 7500 OmniVue instruments at the end of year 2010, the demand for the OmniVue instruments and cartridges are forecasted. There is a new product OmniVue mobile, ready to be launched in year 2013. It is assumed that the OmniVue mobile can be accounted for 30% of the demand for Instruments in year 2013, 50% in year 2014 and 60% in year 2015. The growth in demand for the OmniVue instrument is assumed to decrease after the release of OmniVue mobile.
It is estimated that the production capacity of Bergerac to produce OmniVue instruments is approximately 2000 units per year with a production of 5 days per week. It is inferred that using level strategy, the probability that the demand is not met in the next five years is 5.74%. There is no need to increase the capacity of the production line apart from changes required when the OmniVue mobile is released.
There are various strategies which are compared in build option. For each production strategy, the optimum solution for the capacities in each year is found out. After finding the optimum solutions, the