SCLA Assignment - Group 1

MapleLeaf's Production Planning Optimization

%age Production Capacity Cartons Produced/Day

Peak Production Capacity (in 4yrs) 100 10000
Optimum Capacity of Production (in 3yrs ~ 4yrs) 90 9000

Proposals to counter forecasted demand

Build a New Production Plant

in Mexico

Proposal #1

Increase Capacities in Existing

Facilities
Proposal #2
Initial Investment: $30mn
Production Cost: $10/carton
Daily Capacity: 4000
Production Cushion to outstrip demand: 1000
Tax Rate: 40%
Depreciation: Straight Line
Discount Rate:10%
Life: 10 Years (No Salvage Value)
Construction Time: 2 Years
Operating Schedule: 300 days/year

Check for under utilizations at facilities

Increase %age production Capacity to achieve optimal
utilization of 90-100% to check if demand is met optimally
Years Demand Capacity Facility
1 8000 10000 Centres Toronto
2 8400 10000 Toronto 0.75
3 8800 10000 K.C. 2.50
4 9200 10000 L.A. 4.50
5 9600 12000 Seattle 4.75
6 10000 14000 Chicago 1.50
7 10666.67 14000 Atlanta 3.00
8 11333.3 14000 Guadalajara 5.25
9 12000 14000
10 13000 14000

Production Production
Unit Cost/Carton Daily Capacity/Carton
Toronto $14 2500
Denver $19 1500
LA $13 3500
Seattle $17 2500
 Production Facility Forecast (Demand)
K.C. L.A. Seattle Guadalajara 5-yr 10-yr
2.50 4.50 4.75 5.25 1000 1000
1.00 2.50 2.75 3.25 750 1000
2.50 0.50 2.25 1.75 2500 3000
2.75 2.25 0.75 2.50 1500 2000
1.50 3.75 2.50 3.75 1500 2000
2.25 3.00 3.50 3.50 750 1000
3.25 1.75 3.75 0.50 2000 3000
 Production Costs per
Production Unit Production Cost/Cart Daily Capacity/Carton Daily Capacity
Toronto $14 2500 35000
Denver $19 1500 28500
LA $13 3500 45500
Seattle $17 2500 42500

Peak Production Costs 151500

Optimal Production Costs 136350

Total Costs (Production + Distributions)

Centres Toronto K.C. L.A.
Toronto 14.75 21.50 17.50
K.C. 16.50 20.00 15.50
L.A. 18.50 21.50 13.50
Seattle 18.75 21.75 15.25
Chicago 15.50 20.50 16.75
Atlanta 17.00 21.25 16.00
Guadalajara 19.25 22.25 14.75

Findings:
1. Total Production Cost at Peak Capacity is 151500

2. Total Optimal Cost including Production &

Distribution is 164562.5

3. Production Costs contribute 92% of all costs and

this is the deciding factor

4. All facilities are completely utilized

 Centres Toronto K.C. L.A. Seattle Chicago Atlanta
Toronto 0.75 2.50 4.50 4.75 0 0
K.C. 2.50 1.00 2.50 2.75 0 0
L.A. 4.50 2.50 0.50 2.25 0 0
Seattle 4.75 2.75 2.25 0.75 0 0
Chicago 1.50 1.50 3.75 2.50 0 0
Atlanta 3.00 2.25 3.00 3.50 0 0
Guadalaj 5.25 3.25 1.75 3.75 0 0
Capacity 2500 1500 3500 2500 0 0

Seattle
21.75
19.75
19.25
17.75
19.50
20.50
20.75 Production Facility

Centres Toronto K.C. L.A. Seattle Demand Met

Toronto 1000 0 0 0 1000
K.C. 0 750 0 0 750
L.A. 0 0 1500 1000 2500
Seattle 0 0 0 1500 1500
Chicago 1500 0 0 0 1500
Atlanta 0 750 0 0 750
Guadalajara 0 0 2000 0 2000

Production 2500 1500 3500 2500 10000

Capacity 2500 1500 3500 2500

Final Optimal Cost 164562.50

Plant
Utilization 100% 100% 100% 100%

%Contribution
of Production
Costs 92%
Guadalajara
5.25
3.25
1.75
2.50
3.75
3.50
0.50
0

Demand
Expected
1000
750
2500
1500
1500
750
2000

10000
 Production Costs per
Production Unit Production Cost/Cart Daily Capacity/Carton Daily Capacity
Toronto $14 2500 35000
Denver $19 1500 28500
LA $13 3500 45500
Seattle $17 2500 42500

Peak Production Costs 151500

Optimal Production Costs 136350

Total Costs (Production + Distributions)

Centres Toronto K.C. L.A.
Toronto 14.75 21.50 17.50
K.C. 16.50 20.00 15.50
L.A. 18.50 21.50 13.50
Seattle 18.75 21.75 15.25
Chicago 15.50 20.50 16.75
Atlanta 17.00 21.25 16.00
Guadalajara 19.25 22.25 14.75

Findings:
1. Total Production Cost at Peak Capacity is 151500

2. Total Optimal Cost including Production &

Distribution is 168187.5

3. Production Costs contribute 90% of all costs and

this is the deciding factor

4. LA & Seattle Facilities are underutilized

 Centres Toronto K.C. L.A. Seattle Chicago Atlanta
Toronto 0.75 2.50 4.50 4.75 0 0
K.C. 2.50 1.00 2.50 2.75 0 0
L.A. 4.50 2.50 0.50 2.25 0 0
Seattle 4.75 2.75 2.25 0.75 0 0
Chicago 1.50 1.50 3.75 2.50 0 0
Atlanta 3.00 2.25 3.00 3.50 0 0
Guadalaj 5.25 3.25 1.75 3.75 0 0
Capacity 2500 1500 3500 2500 0 0

Seattle
21.75
19.75
19.25
17.75
19.50
20.50
20.75 Production Facility

Centres Toronto K.C. L.A. Seattle Demand Met

Toronto 0 0 0 0 0
K.C. 0 0 0 750 750
L.A. 2500 0 0 0 2500
Seattle 0 0 1500 0 1500
Chicago 0 0 1500 0 1500
Atlanta 0 0 0 750 750
Guadalajara 0 1500 0 500 2000

Production 2500 1500 3000 2000 9000

Capacity 2500 1500 3500 2500

Final Optimal Cost 168187.50

Plant
Utilization 100% 100% 86% 80%

%Contribution
of Production
Costs 90%
Guadalajara
5.25
3.25
1.75
2.50
3.75
3.50
0.50
0

Demand
Expected
1000
750
2500
1500
1500
750
2000

10000
Production Unit Production Cost/Carton Daily Capacity/Carton
Toronto $14 2500
Denver $19 1500
LA $13 3500
Seattle $17 2500

Peak Production Costs

Optimal Production Costs

Total Costs (Production + Distributions)

Centres Toronto K.C.
Toronto 14.75 21.50
K.C. 16.50 20.00
L.A. 18.50 21.50
Seattle 18.75 21.75
Chicago 15.50 20.50
Atlanta 17.00 21.25
Guadalajara 19.25 22.25

Findings:
1. Total Production Cost at Peak Capacity is 151500

2. Total Optimal Cost including Production &

Distribution is 159550

3. Production Costs contribute 95% of all costs and

this is the deciding factor

4. LA & Seattle Facilities are optimally utilized with

the below increase in capacity

Increase Capacity in
Increase Capacity in Seattle
LA by: 23%
by: 18%
 Production Costs per
Daily Capacity Centres Toronto K.C. L.A. Seattle
35000 Toronto 0.75 2.50 4.50 4.75
28500 K.C. 2.50 1.00 2.50 2.75
45500 L.A. 4.50 2.50 0.50 2.25
42500 Seattle 4.75 2.75 2.25 0.75
Chicago 1.50 1.50 3.75 2.50
151500 Atlanta 3.00 2.25 3.00 3.50
136350 Guadalaj 5.25 3.25 1.75 3.75
Capacity 2500 1500 3500 2500

L.A. Seattle
17.50 21.75
15.50 19.75
13.50 19.25
15.25 17.75
16.75 19.50
16.00 20.50
14.75 20.75 Production Facility

Centres Toronto K.C. L.A.

Toronto 1000 0 0
K.C. 0 0 0
L.A. 0 500 850
tion Cost at Peak Capacity is 151500 Seattle 0 0 1500
timal Cost including Production & Chicago 0 0 1500
Distribution is 159550 Atlanta 0 0 0
osts contribute 95% of all costs and Guadalajara 0 1000 0
is is the deciding factor
Production 1000 1500 3850
Facilities are optimally utilized with
below increase in capacity Capacity 2500 1500 4287.5

Final Optimal Cost 159550.00

Plant
787.5 4287.5 Utilization 40% 100% 90%
450 2950

%Contribution
of Production
Costs 95%
 Chicago Atlanta Guadalajara
0 0 5.25
0 0 3.25
0 0 1.75
0 0 2.50
0 0 3.75
0 0 3.50
0 0 0.50
0 0 0

ility
Demand
Seattle Demand Met Expected
0 1000 1000
750 750 750
1150 2500 2500
0 1500 1500
0 1500 1500
750 750 750
0 1000 2000

2650 9000 10000

2950

90%
 Production Costs per
Production Unit Production Cost/Cart Daily Capacity/Carton Daily Capacity
Toronto $14 2500 35000
Denver $19 1500 28500
LA $13 3500 45500
Seattle $17 2500 42500

Peak Production Costs 151500

Optimal Production Costs 136350

Total Costs (Production + Distributions)

Centres Toronto K.C. L.A.
Toronto 14.75 21.50 17.50
K.C. 16.50 20.00 15.50
L.A. 18.50 21.50 13.50
Seattle 18.75 21.75 15.25
Chicago 15.50 20.50 16.75
Atlanta 17.00 21.25 16.00
Guadalajara 19.25 22.25 14.75

Findings:
1. Total Production Cost at Peak Capacity is 151500

2. Total Optimal Cost including Production &

Distribution is 183875

5. All Facilities are fully utilized and are only meting

demand of 10000 as opposed to an optimal demand
of 13000 incurring a loss of $51375 daily
 Centres Toronto K.C. L.A. Seattle Chicago Atlanta
Toronto 0.75 2.50 4.50 4.75 0 0
K.C. 2.50 1.00 2.50 2.75 0 0
L.A. 4.50 2.50 0.50 2.25 0 0
Seattle 4.75 2.75 2.25 0.75 0 0
Chicago 1.50 1.50 3.75 2.50 0 0
Atlanta 3.00 2.25 3.00 3.50 0 0
Guadalaj 5.25 3.25 1.75 3.75 0 0
Capacity 2500 1500 3500 2500 0 0

Seattle
21.75
19.75
19.25
17.75
19.50
20.50
20.75 Production Facility

Centres Toronto K.C. L.A. Seattle Demand Met

Toronto 0 1000 0 0 1000
K.C. 1000 0 0 0 1000
L.A. 1500 0 0 0 1500
Seattle 0 500 0 0 500
Chicago 0 0 2000 0 2000
Atlanta 0 0 0 1000 1000
Guadalajara 0 0 1500 1500 3000

Production 2500 1500 3500 2500 10000

Capacity 2500 1500 3500 2500

Final Optimal Cost 183875.00

Plant
Utilization 100% 100% 100% 100%

Average Cost of
Prod+Dist of
One Carton 17.13
Loss of Cartons
Daily 3000
Average Loss of
Daily Revenue 51375
Guadalajara
5.25
3.25
1.75
2.50
3.75
3.50
0.50
0

Demand
Expected
1000
1000
3000
2000
2000
1000
3000

13000
 Production Costs per
Production Unit Production Cost/Cart Daily Capacity/Carton Daily Capacity
Toronto $14 2500 35000
Denver $19 1500 28500
LA $13 3500 45500
Seattle $17 2500 42500

Peak Production Costs 151500

Optimal Production Costs 136350

Total Costs (Production + Distributions)

Centres Toronto K.C. L.A.
Toronto 14.75 21.50 17.50
K.C. 16.50 20.00 15.50
L.A. 18.50 21.50 13.50
Seattle 18.75 21.75 15.25
Chicago 15.50 20.50 16.75
Atlanta 17.00 21.25 16.00
Guadalajara 19.25 22.25 14.75

Findings:
1. Total Production Cost at Peak Capacity is 151500

2. Total Optimal Cost including Production &

Distribution is 165875

3. Production Costs contribute 91% of all costs and

this is the deciding factor

4. KC & Seattle Facilities are underutilized

 Centres Toronto K.C. L.A. Seattle Chicago Atlanta
Toronto 0.75 2.50 4.50 4.75 0 0
K.C. 2.50 1.00 2.50 2.75 0 0
L.A. 4.50 2.50 0.50 2.25 0 0
Seattle 4.75 2.75 2.25 0.75 0 0
Chicago 1.50 1.50 3.75 2.50 0 0
Atlanta 3.00 2.25 3.00 3.50 0 0
Guadalaj 5.25 3.25 1.75 3.75 0 0
Capacity 2500 1500 3500 2500 0 0

Seattle
21.75
19.75
19.25
17.75
19.50
20.50
20.75 Production Facility

Centres Toronto K.C. L.A. Seattle Demand Met

Toronto 0 0 0 0 0
K.C. 0 0 0 1000 1000
L.A. 500 0 0 0 500
Seattle 0 0 2000 0 2000
Chicago 0 0 1500 0 1500
Atlanta 0 0 0 1000 1000
Guadalajara 2000 1000 0 0 3000

Production 2500 1000 3500 2000 9000

Capacity 2500 1500 3500 2500

Final Optimal Cost 165875.00

Plant
Utilization 100% 67% 100% 80%

%Contribution
of Production
Costs 91%
Guadalajara
5.25
3.25
1.75
2.50
3.75
3.50
0.50
0

Demand
Expected
1000
1000
3000
2000
2000
1000
3000

13000
 Production Production Costs per
Production Unit Cost/Carton Daily Capacity/Carton Daily Capacity
Toronto $14 2500 35000
Denver $19 1500 28500
LA $13 3500 45500
Seattle $17 2500 42500

Peak Production Costs 151500

Optimal Production Costs 136350

Total Costs (Production + Distributions)

Centres Toronto K.C. L.A.
Toronto 14.75 21.50 17.50
K.C. 16.50 20.00 15.50
L.A. 18.50 21.50 13.50
Seattle 18.75 21.75 15.25
Chicago 15.50 20.50 16.75
Atlanta 17.00 21.25 16.00
Guadalajara 19.25 22.25 14.75

Findings:

1. Total Production Cost at Peak Capacity is 151500

2. Total Optimal Cost including Production &

Distribution is 158800

3. Seattle Facilities is optimally utilized with a 30%

increase in capacity

Increase Capacity in
LA by: 0% 0
Increase Capacity in
Seattle by: 30% 750
 Centres Toronto K.C. L.A. Seattle Chicago Atlanta
Toronto 0.75 2.50 4.50 4.75 0 0
K.C. 2.50 1.00 2.50 2.75 0 0
L.A. 4.50 2.50 0.50 2.25 0 0
Seattle 4.75 2.75 2.25 0.75 0 0
Chicago 1.50 1.50 3.75 2.50 0 0
Atlanta 3.00 2.25 3.00 3.50 0 0
Guadalaj 5.25 3.25 1.75 3.75 0 0
Capacity 2500 1500 3500 2500 0 0

Seattle
21.75
19.75
19.25
17.75
19.50
20.50
20.75 Production Facility

Centres Toronto K.C. L.A. Seattle Demand Met

Toronto 950 50 0 0 1000
K.C. 550 0 0 450 1000
L.A. 1000 0 0 0 1000
Seattle 0 0 0 0 0
Chicago 0 0 2000 0 2000
Atlanta 0 0 0 1000 1000
Guadalajara 0 0 1500 1500 3000

Production 2500 50 3500 2950 9000

Capacity 2500 1500 3500 3250

Final Optimal Cost 158800.00

Plant
1500 Utilization 100% 3% 100% 91%

3250
Guadalajara
5.25
3.25
1.75
2.50
3.75
3.50
0.50
0

Demand
Expected
1000
1000
3000
2000
2000
1000
3000

13000
 Production Costs
Production per Daily
Production Unit Cost/Carton Daily Capacity/Carton Capacity
Toronto $14 2500 35000
Denver $19 1500 28500
LA $13 3500 45500
Seattle $17 2500 42500
Guadalajara $10 4000 40000
Peak Production Costs 191500
Optimal Production Costs 172350

Total Costs (Production + Distributions)

Centres Toronto K.C. L.A. Seattle
Toronto 14.75 21.50 17.50 21.75
K.C. 16.50 20.00 15.50 19.75
L.A. 18.50 21.50 13.50 19.25
Seattle 18.75 21.75 15.25 17.75
Chicago 15.50 20.50 16.75 19.50
Atlanta 17.00 21.25 16.00 20.50
Guadalajara 19.25 22.25 14.75 20.75

Findings: 1. Total Production Cost at Peak Capacity is

191500

2. Total Optimal costs with New plant is

147125

3. The New plant at Guadalajara is not

performing optimally and also there's a low
average utilization overall to cater to the
demand hence it doesn't make sense in the
short run of 5 year timeframe
Centres Toronto K.C. L.A. Seattle Chicago Atlanta
Toronto 0.75 2.50 4.50 4.75 0 0
K.C. 2.50 1.00 2.50 2.75 0 0
L.A. 4.50 2.50 0.50 2.25 0 0
Seattle 4.75 2.75 2.25 0.75 0 0
Chicago 1.50 1.50 3.75 2.50 0 0
Atlanta 3.00 2.25 3.00 3.50 0 0
Guadalajara 5.25 3.25 1.75 3.75 0 0
Capacity 2500 1500 3500 2500 0 0

Guadalajara
15.25 Total Capacity Optimal Demand
13.25 12000 10800 9600
11.75
12.50
13.75
13.50
10.50 Production Facility

Centres Toronto K.C. L.A. Seattle Guadalajara

Toronto 1000 0 0 0 0
K.C. 0 0 750 0 0
L.A. 0 0 0 0 2500
Seattle 0 0 0 1500 0
Chicago 1500 0 0 0 0
Atlanta 0 0 750 0 0
Guadalajara 0 0 2000 0 0

Production 2500 0 3500 1500 2500

Capacity 2500 1500 3500 2500 4000

Final Optimal Cost 147125.00

Plant
Utilization 100% 0% 100% 60% 63%

Average
Facility
Utilization 65%
Guadalajara
5.25
3.25
1.75
2.50
3.75
3.50
0.50
4000

Demand
Demand Met Expected
1000 1000
750 750
2500 2500
1500 1500
1500 1500
750 750
2000 2000

10000 10000
 Production Costs
Production per Daily
Production Unit Cost/Carton Daily Capacity/Carton Capacity
Toronto $14 2500 35000
Denver $19 1500 28500
LA $13 3500 45500
Seattle $17 2500 42500
Guadalajara $10 4000 40000
Peak Production Costs 191500
Optimal Production Costs 172350

Total Costs (Production + Distributions)

Centres Toronto K.C. L.A. Seattle
Toronto 14.75 21.50 17.50 21.75
K.C. 16.50 20.00 15.50 19.75
L.A. 18.50 21.50 13.50 19.25
Seattle 18.75 21.75 15.25 17.75
Chicago 15.50 20.50 16.75 19.50
Atlanta 17.00 21.25 16.00 20.50
Guadalajara 19.25 22.25 14.75 20.75

Findings:
1. Total Production Cost at Peak Capacity is
191500 whereas optimal cost is 201375

2. New Plant at Guadalajara is offering

significant cost optimizations

3. Average Utilization across all facilities is

92% for a 10 year timeframe as opposed to a
5 year one where utilization is 65% only

4. Demand is being met 100% as projected

Centres Toronto K.C. L.A. Seattle Chicago Atlanta
Toronto 0.75 2.50 4.50 4.75 0 0
K.C. 2.50 1.00 2.50 2.75 0 0
L.A. 4.50 2.50 0.50 2.25 0 0
Seattle 4.75 2.75 2.25 0.75 0 0
Chicago 1.50 1.50 3.75 2.50 0 0
Atlanta 3.00 2.25 3.00 3.50 0 0
Guadalajara 5.25 3.25 1.75 3.75 0 0
Capacity 2500 1500 3500 2500 0 0

Guadalajara
15.25 Total Capacity Optimal Demand
13.25 14000 12600 13000
11.75
12.50
13.75
13.50
10.50 Production Facility

Centres Toronto K.C. L.A. Seattle Guadalajara

Toronto 1000 0 0 0 0
K.C. 0 1000 0 0 0
L.A. 0 0 0 0 3000
Seattle 0 0 0 2000 0
Chicago 1500 0 0 500 0
Atlanta 0 500 500 0 0
Guadalajara 0 0 3000 0 0

Production 2500 1500 3500 2500 3000

Capacity 2500 1500 3500 2500 5000

Final Optimal Cost 201375.00

Plant
Utilization 100% 100% 100% 100% 60%

Average
Facility
Utilization 92%
Guadalajara
5.25
3.25
1.75
2.50
3.75
3.50
0.50
4000

Demand
Demand Met Expected
1000 1000
1000 1000
3000 3000
2000 2000
2000 2000
1000 1000
3000 3000

13000 13000
 5 Year Window

1. As Per Analysis, although the facilities are able to cater to the requisite demands for 5 years,
however all facilities are completely utilized unless they raise their production capacities to
cater to future demands

2. For optimal utilization and catering to future demands, LA & Seattle facilities need to ramp up
production capacities by the percentages highlighted in the analysis sheet

3. New Plant at Guadalajara also doesn't make sense in the shorter time frame as it doesn't
result in an overall cost & resource optimizaion for the MapleLeaf corporation as total optimal
costs are on the higher side with an effective utilization efficiency of just 65%
 5 Year Window 10 Year Window

1. As Per Analysis, although the facilities are able to cater to the

ties are able to cater to the requisite demands for 5 years,
years, however all facilities are completely utilized beyond 7th ye
y utilized unless they raise their production capacities to
production capacities to cater to future demands and achieve a c
ater to future demands
2. For optimal utilization and catering to future demands, KC & Sea
to future demands, LA & Seattle facilities need to ramp up
up production capacities by the percentages highlighted in the a
he percentages highlighted in the analysis sheet
Mapleleaf incurs an average net loss of $5137
oesn't make sense in the shorter time frame as it doesn't
3. The Guadalajara plant makes complete sense for a 10 year time
ptimizaion for the MapleLeaf corporation as total optimal
tandem are collectively 92% utilized and able to meet the future d
with an effective utilization efficiency of just 65%
4. Mapleleaf should bump up the capacity to atleast 5000 carton
meet the future demands
 10 Year Window

acilities are able to cater to the requisite demands for 6

mpletely utilized beyond 7th year unless they raise their
ture demands and achieve a collectively optimized state

ng to future demands, KC & Seattle facilities need to ramp

ercentages highlighted in the analysis sheet otherwise
s an average net loss of $51375 daily

mplete sense for a 10 year timeframe as all the facilities in

d and able to meet the future demands of 13000 cartons

capacity to atleast 5000 cartons/day for Guadalajara to

eet the future demands