Garland Chocolate, is a manufacturer company, located in Durham, North Carolina with headquarters in the UK. Garland Chocolate is a leading global manufacturer with a wide range of chocolate and confectionery products with more than 65 brands. Garland Chocolate operates more than 50 plants globally with eight plants in the USA. The Durham plant has 20 products which are spread out to store chains, boutique, and convenience stores in the USA. The Garland Chocolate factory is in need of repair, maintenance and Shanti Suppiah director of operations at Garland Chocolate at Durham is investigating new ideas to improve this situation.

Analysis

Quantitative:

• Selling Price of Garland Chocolates $145.00
  • Raw Materials $24.65
  • Packing Materials $29.00
  • Labor-Manufacturing $13.05
  • Labor-Packing $7.25
  • Overhead & Depreciation $21.75
  • Total Cost $95.70

• Margin Profit  $49.30

• Outsourcing to Martin Contract Manufacturing costs $35,000.00 in tooling.
•  Maintenance cost over 12 months is $18,000.00.
• The cost of replacing the two packing lines for Edgeworth toffee is $140,000.00.
• The cost of replacing the 20-year-old manufacturing line is $600,000.00.
• Outsourcing Production Cost $68.00 (manufacturing and packaging only) Martin quoted Raw Materials provided by Garland Chocolates $24.65
  • Packing Materials provided by Garland Chocolates $29.00
  • Labor-Packing provided by Garland Chocolates $7.25
  • Overhead & Depreciation $21.75

Total cost for outsourcing $150. 95

Qualitative:
Quality of the product has not changed, only the venue of production has.

Garland Chocolate well-reputed brand.

Garland Chocolate is globally well known.

Issues:

• Garland Chocolates is not manufacturing and packing their brand of Edgeworth Toffee as efficiently or effectively as possible.
  48% Packing efficiency, when the goal is 80%.
  Scrap rate is 9.6% when the goal is 1.2%.
• Maintenance cost is expected to rise 25% over 12 months, and it is already $18,000.00.
• The cost of replacing the two packing lines for Edgeworth toffee is $140,000.00. However, it is expected to achieve the BPO efficiency and scrap rate targets.
  The cost of replacing the 20-year-old manufacturing line is $600,000.00, though it was close to the target efficiency of 80% but is showing signs of deterioration.
• Marketing has proposed a new marketing strategy (new packaging format) which would deliver an estimated 20% increase in sales. 
• Outsourcing the packing lines would cost $35,000.00 up front, but the actual cost of production will decrease from $95.70 per case to $68.00
   

Alternatives:

Alternative 1:
Replace manufacturing lines -Advantages and disadvantages
The advantage of replacing the manufacturing lines now would combat the decreasing efficiency rate, where the disadvantage is that efficiency will increase and in the next years.

 

Alternative 2:

Accept the offer to outsource the product; this would increase efficiency. However, the quality of the product may be at risk.

 

Alternative 3:

Don’t do anything about it. Save money on new manufacturing which is $600,000.00, two packing lines for Edgeworth toffee is $140,000.00, and save as well $35,000 for outsourcing.

Background:

Garland Chocolate, is a manufacturer company, located in Durham, North Carolina with headquarters in the UK. Garland Chocolate is a leading global manufacturer with a wide range of chocolate and confectionery products with more than 65 brands. Garland Chocolate operates more than 50 plants globally with eight plants in the USA. The Durham plant has 20 products which are spread out to store chains, boutique, and convenience stores in the USA. The Garland Chocolate factory is in need of repair, maintenance and Shanti Suppiah director of operations at Garland Chocolate at Durham is investigating new ideas to improve this situation.

Analysis

Quantitative:

• Selling Price of Garland Chocolates $145.00
  • Raw Materials $24.65
  • Packing Materials $29.00
  • Labor-Manufacturing $13.05
  • Labor-Packing $7.25
  • Overhead & Depreciation $21.75
  • Total Cost $95.70

• Margin Profit  $49.30

• Outsourcing to Martin Contract Manufacturing costs $35,000.00 in tooling.
•  Maintenance cost over 12 months is $18,000.00.
• The cost of replacing the two packing lines for Edgeworth toffee is $140,000.00.
• The cost of replacing the 20-year-old manufacturing line is $600,000.00.
• Outsourcing Production Cost
  $68.00 (manufacturing and packaging only) Martin quoted
  • Raw Materials provided by Garland Chocolates $24.65
  • Packing Materials provided by Garland Chocolates $29.00
  • Labor-Packing provided by Garland Chocolates $7.25
  • Overhead & Depreciation $21.75

Total cost for outsourcing $150. 95

 

 

 

Qualitative:
Quality of the product has not changed, only the venue of production has.

Garland Chocolate well-reputed brand.

Garland Chocolate is globally well known.

Issues:

• Garland Chocolates is not manufacturing and packing their brand of Edgeworth Toffee as efficiently or effectively as possible.
  48% Packing efficiency, when the goal is 80%.
  Scrap rate is 9.6% when the goal is 1.2%.
• Maintenance cost is expected to rise 25% over 12 months, and it is already $18,000.00.
• The cost of replacing the two packing lines for Edgeworth toffee is $140,000.00. However, it is expected to achieve the BPO efficiency and scrap rate targets.
  The cost of replacing the 20-year-old manufacturing line is $600,000.00, though it was close to the target efficiency of 80% but is showing signs of deterioration.
• Marketing has proposed a new marketing strategy (new packaging format) which would deliver an estimated 20% increase in sales. 
• Outsourcing the packing lines would cost $35,000.00 up front, but the actual cost of production will decrease from $95.70 per case to $68.00
   

Alternatives:

Alternative 1:
Replace manufacturing lines -Advantages and disadvantages
The advantage of replacing the manufacturing lines now would combat the decreasing efficiency rate, where the disadvantage is that efficiency will increase and in the next years.

 

Alternative 2:

Accept the offer to outsource the product; this would increase efficiency. However, the quality of the product may be at risk.

 

Alternative 3:

Don’t do anything about it. Save money on new manufacturing which is $600,000.00, two packing lines for Edgeworth toffee is $140,000.00, and save as well $35,000 for outso

 Question:  How does your analysis change if sales increase or decrease?

Answer rating: 100% (QA)

Answer stinda ved cost based on caleulation coshen meg e Patking lines are Replac... View the full answer