The Management employed a team of Work Study experts to study the overall operations. Their recommendations helped in bringing 15% productivity improvement in Tyre building operation. What will be its impact on cost of operations?How many tyre building machines could be disposed off or shifted to another plant if these recommendations are implemented?
CASE STUDY IN OPERATIONS MANAGEMENT “Roadking” Tyre Manufacturing company have their manufacturing facilities in Mumbai. Majority of their sales are concentrated in North and East zones, however, they have seen an increasing demand from West zone and there is a good market potential in West zone. The Sales forecast is given below: Q1-2011 onwards Q1-2010 Q2-2010 Q3-2010 Q4-2010 100000 60000 80000 120000 No. of tyres 40000 Their existing manufacturing facilities at Mumbai are already running to full capacity and so they need to set up a new tyre manufacturing plant in West zone, to meet the above sales projections provides the information about the product and the manufacturing processes. After installation of the necessary machines, the overall capacity utilization of the plant is expected to be 90%, with a m wastage or rejection rate of around 5%. aterial average labour rate is Rs.30 per hour and the average efficiency of labour is 90%. The overheads for managing the plant and workforce are 25% of labour cost. The A transport truck carries around 200 tyres per trip and the average cost per trip is Rs. 1200.