Specialty Packaging Corporation 1

Running Head: SPECIALITY PACKAGING CORPORATION

Specialty Packaging Corporation Case study

Name

Date

Class

Instructor
 Specialty Packaging Corporation 2

Specialty Packaging Corporation is a company that processes polystyrene resin into

disposable containers that can be used in the food industry to package different kinds of foods.

The management has been weighing on the options of storing their goods. The options are

private warehousing or public warehousing.

Price established by the subcontractors will certainly influence the decision about the

amount of private warehousing space that should be leased. This is because the company only

has money to invest into each project depending on the subcontractors rates as well as the

amount of work to be done thus the price will vary. Thus, if it appears that the subcontractor is

charging more than expected, the rates of private warehousing space to be leased may have to

decrease. However, this is not the only item Julie needs to consider. Julie must also consider

how much space the company should lease. If she errs too much in either direction, she can hurt

the company by either paying too much, or by not providing enough space; neither error will be

helpful to the goals of the company. So, the needs of the company, as well as the pulls of the

overall market will need to be considered when making this decision. Julie will need to examine

trends of the companys current market and current needs in order to assist her with making this

decision (Groover, 2007, p. 787).

She must also consider how much space is really needed. Obtaining too much space will

be a waste of money for the company and can thus detrimentally hurt the company. However,

getting too little space will hurt the company because it will not give the company what it needs

to solve its problems for the next two years. Therefore, Julie must try to get a strong estimate of

how much space is really needed over the two year period. This is where potential error in the

demand forecast will certainly come into play. She must be careful about this error forecast, as

she needs to make sure she does not calculate too strongly one way or the other. Ideally, she may
 Specialty Packaging Corporation 3

want to leave a bit of room in the calculations to fall either in the greater or lesser margin

depending on how the company seems to be doing within this aspect of need. For instance, does

the need seem to be increasing or decreasing at this time? Determining what direction the need

of the company is heading can hopefully help her reduce any margin for error in one direction or

the other.

The Aggregate production planning refers to the planning method that involves planning

the production output levels of product lines that should be produced by a firm. The plans are

coordinated through using different functions of the firms such as product design, production,

sales and marketing (Shim, & Siegel, 1999, p .231).

Thermoforming
Extruders Presses total
N.o. of particulars 14 25 39
Processing capacity of each 3000 pounds per
particular hour 2000 pounds per hour
Capacity loss 5%
Effective processing capacity 2850 per hours
Workers 6 25 31
Salary $15 $15 $30
Overtime 150%(15) 150%(15) 45
Limit of overtime per quarter 60 60 120
Fixed cost of each particular per
quarter 80,000 80,000 160,000
Training cost per worker 3000 $3,000 $6,000
Laying off workers $2,000 2500 $4,500
Training cost for Re-use of idle
extruders $2,000 $2,000
$172,765

The demand forecast for the company for the next three years is;

Forecast
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Black plastic Cum.demand Normal Prod. Prod. rate

forecast forecast days units/day

2007 I 6650 6650

ii 4576 11226
iii 6293 17519
iv 13777 31296
31296 63 496.7619048

2008 I 7509 7509

ii 5149 12658
iii 7056 19714
iv 15399 35113
35113 63 557.3492063

2009 I 8367 8367

ii 5721 14088
iii 7819 21907
iv 17021 38928
38928 63 617.9047619

Clear
plast. Normal Prod. Prod. Hrs Prod. rate per
forecast Cum. Dd. forecast days /employee unit
2007
I 7462 7462
ii 18250 25712
iii 8894 34606
iv 4064 38670
38670 63 504 613.8095238
2008
I 8349 8349
ii 20355 28704
iii 9891 38595
iv 4507 43102
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43102 63 504 684.1587302

2009
I 9235 9235
ii 22461 31696
iii 10889 42585
iv 4950 47535
47535 63 504 754.5238095
2052.492
Hours worked by the employees =8

2007

Clear plast. Cost of

forecast production
2007
I 7462
ii 18250
iii 8894
iv 4064 172765

2008
I 8349
ii 20355
iii 9891
iv 4507 172765

2009
I 9235
ii 22461
iii 10889
iv 4950 172765
129307 518295
 Specialty Packaging Corporation 6

Black plastic
forecast Cost of production

2007 I 6650
ii 4576
iii 6293
iv 13777 172765

2008 I 7509
ii 5149
iii 7056
iv 15399 $172,765

2009 I 8367
ii 5721
iii 7819
iv 17021 172765
105337 518295

References
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Groover, M. P. (2007). Automation, production systems, and computer-integrated

Manufacturing 3rd ed. Upper Saddle River, New Jersey: Prentice Hall.

Shim, J. K. & Siegel, J. G. (1999) .Operations management .Wireless Blvd Hauppauge New

York: Barrons Educational Series.