Belle Inc.
Autor: Anurag Pramod • September 28, 2016 • Case Study • 1,132 Words (5 Pages) • 2,945 Views
OVERVIEW
Belle inc. was involved in cosmetic business nearly for a century. It was valued around $3 billion based on the annual sales of $2.4 billion. The cosmetics industry was the fastest-growing industry with $170 billion sales. It has a unit in Seneca, South Carolina. It produces 30% of the overall production of almost 1600 types of fragrances. Mass market fragrances, Prestige fragrances and creams and lotions were the three production divisions in the plant.
PROBLEM
Under the directive from the Senior Vice president, the company had given a directive to reduce the costs and working capital. After numerous rounds of discussion, they have planned to reduce production quantities so that the inventory build-up at the plant is reduced. However, over a period of time, the costs increased. This made them look at alternatives to tackle the costs. They also have to meet the additional demand that they expect. So, we need to look at the best choice among all the solutions we can implement.
CALCULATIONS
Current Business Process:
Total volume of production= Total number of Run * Lot size
Total Number of Run= Total volume / lot size
For 2013,
Total Number of Run = 2047
Total Labor time available=360*16 = 5760 hours
Rated cycle time= Run time + Set up time
= .4/60*10500+ 90= 70+90 = 160 min= 2.667 hours
If lot size is 15000= .4/60*15000+90= 190 = 3.167 hours
Actual Cycle time = Total time/ total number of lot
= Total time/ Total volume * lot size
= 5760/21499924*10500= 2.813 hours
If lot size is 15000, ACT= 4.0187 hours
Utilization:
Lot size for 10500 = 94.78%
Lot size for 15000 = 77.58%
Direct Labor time = 2.67*2047
Direct Labor Content = Direct labor time * total number labor =2.67* 2047*18= 98378.82
Direct Labor Cost= Cost * Direct labor Content = $2361091.68
Direct Labor Utilization= Direct labor Content/ Direct Labor Available
= 98378.82/ 360*16*18= 94.88%
Total Production Cost = Material
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