a case study presentation on Halo dvd manufacturer with their operations plan.

1. HALO, A DVD Manufacturer:
Sketching its Aggregate Sales
and Operations Plan
Presented by:
Sheetal Verma

2. INTRODUCTION
• The case study primarily deals with preparing the annual operations and
sales plan for a DVD manufacturing company (Halo).
• Operations and Sales plan is not only important but also essential for
any firm.
• When it comes to manufacturing firms, the plan is extremely important
since the firm’s profitability is based on the plan prepared.
• Mohan, the operations manager for Halo, is given the responsibility to
prepare the operations and sales plan for the next 6 months i.e. January–
June.

3. Aggregate Planning Strategies
• Use inventories to absorb changes in demand.
• Accommodate changes by varying workforce size.
• Use part timer, overtime, or idle time to absorb changes.
• Use subcontractors and maintain a stable workforce.
• Change prices or other factors to influence demand.
Based on the above strategies Mohan proposed the following three
plans :
 PLAN1- Workforce is Constant but inventory varies and allows
shortages(assuming starting workforce of 20)
 PLAN2- Produce exactly meets demand but workforce
varies(assuming opening workforce equal to first month’s
requirements).
 PLAN3- Constant workforce of 20. Use subcontracting.

4. PLAN 1
Workforce is Constant but inventory varies and allows shortages
(assuming starting workforce of 20)
Month Demand
forecast
Working
days
Demand
per day
Jan 450 14 32
Feb 560 20 28
Mar 650 18 36
Apr 780 25 31
May 900 25 36
June 970 24 40
Total 4310 126 203
Avg. Requirement = Total forecast/No of working days
= 4310 / 126
= 34

5. Month Workin
g days
Production
@34 units/
day
Deman
d
Foreca
st
Monthly
inventory
change
Ending
inventory
Jan 14 476 450 +26 26
Feb 20 680 560 +120 146
Mar 18 612 650 -38 108
Apr 25 850 780 +70 178
May 25 850 900 -50 128
June 24 816 970 -154 -26*
Total 126 4284 4310 560
• Inventory Holding Cost= 560*500
=Rs. 2,80,000
• Labor cost= (8*14*325)+20*112*325
=Rs. 7,64,400
• Material cost = 4284*5000
= Rs.2,14,20,000
• Total cost = Rs. 2,24,64,400

6. PLAN 2
Produce exactly meets demand but workforce varies (assuming
opening workforce equal to first month’s requirements).
Month Demand
forecast
Working
days
Demand
per day
Jan 450 14 32
Feb 560 20 28
Mar 650 18 36
Apr 780 25 31
May 900 25 36
June 970 24 40
Total 4310 126 203
Production = Demand Forecast

7. Month Demand
forecast
Production
Per day
Production
cost
Jan 450 32 731250
Feb 560 28 910000
Mar 650 36 1056250
Apr 780 31 1267500
May 900 36 1462500
June 970 40 1576250
Total 4310 203 7003750
• Total Labour cost = Rs. 70,03,750
• Total Hiring cost = 2500*4
= Rs. 10,000
• Total Layoff cost = 5000*2
= Rs. 10,000
• Material cost = 4310*5000
= Rs. 2,15,50,000
• Total Cost = Rs. 2,85,73,750

8. PLAN 3
Constant workforce of 20. Use subcontracting.
Month Demand
forecast
Working
days
Demand
per day
Jan 450 14 32
Feb 560 20 28
Mar 650 18 36
Apr 780 25 31
May 900 25 36
June 970 24 40
Total 4310 126 203
Minimum Requirement = 28 units per day

9. • Units produced = 28*126
= 3528 units
• Subcontracting units = 4310 – 3528
= 782units
• Labour cost (units produced ) = (3528*5)/20
= 882 hrs/worker*325
A = Rs. 2,86,650
• Cost (subcontracting units ) = (782*5)/20
= 195.5*250
B =Rs. 48,875
• Total labor cost (A+B) = Rs. 29,35,525
• Material Cost = Rs. 1,76,40,000
• Total cost = Rs. 2,05,75,525

10. Comparison of the Three Plans
Costs PLAN 1 PLAN 2 PLAN 3
Inventory
holding cost
2,80,000 - -
Labour cost 7,64,400 7003750 29,35,525
Material cost 2,14,20,000 2,15,50,000 1,76,40,000
Total hiring
cost
- 10000 -
Total layoff
cost
- 10000 -
Total cost 2,24,64,400 2,85,73,750 2,05,75,525
Lowest
cost