Production Plan for Pullovers at Sheetamber

Sachin, the COO of Sheetamber, a woollen garments manufacturing unit was developing a
production plan for production of pullovers for the coming winter season.

Pullovers were the most expensive and fast moving item out of their offerings. Forecasting was a
very critical decision as it could make-or-break the organization. Pullovers were made in various
designs, colours and sizes. Each design was made in six colours and four sizes, which completed a
set. For economies of scale, as well as, to serve all the outlets, a large number of sets for each design
were produced. The company started its production three months before the start of winter season
and continued producing till the end of the season. This gave the company three months lead time
before the season start; however, the trends were available only once the season started.

Sachin called a meeting of all the managers to understand the demand forecast. To start with he
asked for the opinion from each manager about demand of each style. Table 1 provides the forecast
by six senior executives of Sheetamber, for the ten designs under consideration. Subsequently, they
had a discussion, and they arrived at following estimates of demand by consensus.

Table 1: Forecasts by Various Executives

Wholesale Price Production Forecasts (No. of Sets)

Style In. INR Nitin Neeraj Somvendra Vinod Gourishankar Sachin Consensus
A 1100 12 16 15 17 16 18 15
B 990 24 21 30 48 29 36 30
C 800 60 48 45 47 29 41 35
D 900 15 16 18 19 17 18 20
E 1230 24 27 30 33 29 56 30
F 1730 80 77 57 84 54 60 60
G 1330 18 31 30 33 29 64 45
H 730 138 129 117 120 129 90 125
I 930 132 130 123 74 140 112 100
J 1480 97 105 135 125 130 106 130

Table 2: Designations of the Executives

Nitin Store Manager

Neeraj Marketing Manager
Somvendra Production Manager
Vinod Sales Head
Gourishankar Finance Head
Sachin COO

Based on the forecast provided by various executives, Sachin desired to decide on the monthly
production of each of the designs. The total production capacity was 100 sets per month. Sachin was

1
convinced that the actual standard deviation in the demand for any design was twice the standard
deviation of the forecasts made by the executives. The minimum set-up quantity was 18 sets for
each round of production. How much do you think he must produce every month for each design?
Please fill in Table 3 to help Sachin.

Table 3: Monthly Production Plan (No. of Sets)

Style September October November December January February A

Sachin believes that from the next year his sales for Pullovers will increase significantly, as he is
planning to enter new markets. What are the options available to him for increasing the capacity?
Should he increase capacity of his plant? Alternatively, should he outsource? In case he increases the
capacity for how many months, should he use the same? With overtime? With extra labour? With
part time staff? What else is possible?