Lawn King Company

Case Assignment

Lawn King Inc.

Tyler Merriweather

MGT 4352 09/25/2017

Executive Summary

Lawn King Company is a manufacturer of Lawn Mowers. Lawn mowers are machines with one or more blades that are used to cut lawns at an even level. The Lawn King Company has several versions of their lawn mowers that range from 18’ to 22’ decks. Due to increased demand for lawn mowers the Lawn King Company has seen an increase in sales. The current shift in demand threw the company off because they were not prepared for the surge of the market shift. This surge caused the Lawn King Company to have product shortages which lost them money in the long run. In order to keep up with this new booming demand, the Lawn Kings needs to develop a more efficient model that allows them to address the issue with product shortages.

From looking at Lawn King’s current strategy, and from comparing it to the level, chase, and linear programming strategies, I suggest that the Lawn King Company looks into using a level workforce strategy. If they choose to use this strategy it would give the Lawn Kings the ability to employ a consistent number of workers throughout the entire year without having to hire or fire a significant amount of people. This plays a huge role in hiring and firing costs which make a big difference in how the company views its overall total costs. This consistent number of employees also helps to reduce the number of people who need to work overtime. When it comes to total costs, cutting back on hiring, firing, and overtime costs make a huge difference in total cost. This drastic change in total cost will allow the Lawn King Company to operate efficiently while elevating their level of production.

Assume you are the young engineer/analyst who is very familiar with the management science and operations management techniques and is responsible for developing the planning model for Lawn King.  Before writing your final report and recommendations, you are thinking about the answers for the following questions:

1. Based on the information for the current year described in the case, compute the cost elements for the current year’s production plan (Table 5) including the hiring cost, the firing cost, the regular-time cost, the overtime cost, the inventory carrying cost, and the total annual cost. (5 points)[pic 1]

1. Based on the information for the current year described in the case, develop the complete LP model and use Excel Solver to solve for the optimal solution.  Show the optimal plan.  Comparing to the current plan, list the three major differences of the optimal plan. Make constraints to make sure the minimum end inventory of 2,000 units for all four products together for each month.        (15 points)

• The first obvious difference in the optimal plan is the fact that cost is reduced by $107,129. That is a significant difference in cost.

• A second difference between the two comes in the number of people being hired and fired. There are only 9 employees being hired and 21 being fired in the optimal solution compared to there being 41 hired and 53 fired in the current plan that’s in place.[pic 2]
• Finally we see that overtime production decreases significantly during the LP optimal solution.

1. The current plan shown in Table 5 has the chase strategy flavor.  However, if you are going to develop a chase plan, what will it be?  How much is the total planning cost?  What is the % difference as compared to that of the current plan?  For comparison purpose, assume that the end inventory of August is 19360 and the end workforce is 72 in August.         (15 points)

• For the chase plan, fire or hire an integer number of workers if necessary. Fire when you do not need production capacity.  Hire when you need production capacity.
• A current worker or new hired worker will work the complete capacity to produce 83 in regular-time. No overtime is allowed.
• Use an integer number of workers to produce enough or not to produce at all to keep the inventory no less than 2000 every month. However, you have to cumulate inventory up to 19360 at the end of August.  That is, you have to slow down the firing in the last few [pic 3]
• The total cost equals $2,579,269.

• % difference to current plan equals (2,562,925-2,579,269)/2,562,925=6.3%

1. To make another comparison, you also develop a level plan.  Show your level plan.  How much is the total planning cost?  What is the % difference as compared to that of the current plan? For comparison purpose, assume that the end inventory of August is 19360 and the end workforce is 72 in August.         (15 points)

[pic 4]

• Total Cost for level plan equals $2,357,734
• Comparison to current plan equals (2,562,925-2,357,734)/2,562,925=8%

1. Complete the comparison of the following cost analyses.         (10 points)