Foldrite - Planning to Meet a Surge in Demand

1. Introduction

FoldRite is a furniture company founded in 1987. Thanks to its reputation for innovation and with the introduction of durable furniture, FoldRite experienced a high rate of organic growth throughout the 1990s. However, the year 2006 brought financial turmoil, due to the loss of productivity and yields, as well as depleted cash and exhausted management attention. Shortly after the decline, the company processed a series of reformations, which included improving manufacturing quality and efficiency, dropping poor-performing product lines, developing new stylish and environmentally friendly products, and instituting a program that allows customers to customize their orders and still get delivery within two weeks.

Suddenly, the demand for folding and stackable chairs and tables at FoldRite Furniture Co. became unexpectedly elevated. In response to the surge in demand, the company needs a manufacturing plan that controls manufacturing and inventory costs, mitigates risk, and aligns with the company’s overall strategic goal.

These are the options that can be used to meet this surge in demand:

• Use of overtime by asking staff to work an extra shift (including a 10-hour shift on Fridays)

• Increasing staff temporarily to take advantage of idle production capacity

• Changing the designs

• Increasing the amount of inventory using a constant level of production.

• Subcontracting part of the work, such as the manufacture of seats for stackable chairs

• Combination of the above options

2. Analysis

At the current levels of capacity, due to staff numbers, Foldrite