AbstractSreekanth Kumar had just finalized the aggregate production plan for the next financial years manufacturing of molded case circuit breakers $($MCCB$),$ when he received an email from the senior marketing manager about a promotional campaign for recapturing the market share $($of MCCB$)$ lost due to the COVID$-19$ pandemic. He is confused about what the promotional campaign will mean for production; changing production capacity presents myriad challenges, among them securing an adequate supply of materials, as well as hiring and scheduling workers. The case exposes students to the issues faced by the production manager in making a suitable decision to finalize the production plan post COVID$-19$ pandemic.CaseLearning OutcomesStudents should be able to:$1.$describe the importance of aggregate production planning in the overall process of business planning;$2.$discuss the advantages and disadvantages of employing different production planning strategies for managing the supplydemand mismatch in firms; and$3.$discuss alternative strategies and models available for aggregate production planning in order to reach a feasible and cost$-$effective solution to the given problem.Case StudyT&L Ltd $($the actual name of the company is disguised for the purpose of confidentiality$)$ is a premium manufacturer of low voltage switchgear and control gear. On April $5,2021,$ Sreekanth Kumar, Senior Manager $($Production Planning$)$ of T&L Ltd$,$ was about to finalize their aggregate production plan when he received an email from the Senior Marketing Manager, Koushal, regarding the new set of plans and promotional campaigns for recapturing the market share of molded case circuit breakers $($MCCB$)$ lost due to the COVID$-19$ pandemic. Koushal emphasized in his email that the new advertising plan might see an increase in demand for the financial year, perhaps as much as $5\%$ more than Sreekanth had forecast.Sreekanth was perplexed after reading the email. He was in a dilemma about what should be done. Changing the production plan would lead to a lot of problems with capacity, labor issues, and logistics$.$ Sreekanth initiated a meeting with the top management, department heads, and his team members and the main agenda was to devise alternatives to address the current situation and to meet the proposed demand.Overview of the IndustryA molded case circuit breaker $($MCCB$)$ is a type of electrical protection device that has application for a comprehensive array of voltages and frequencies. MCCB is suitable when the load current surpasses the capacities of small circuit breakers. MCCBs are categorized based on rated current and end user $($Transparency Market Research, n$.$d$.).$Rated circuit breakers can be categorized as $020$ A$,2175$ A$,76250$ A$,251800$ A$,$ and above $800$ A$.$ Concerning end$-$users, the global market is distributed across power generation plants; industrial, residential, and commercial sectors; transmission and distribution, manufacturing and process industry; transportation; and others $($Transparency Market Research, n$.$d$.).$The demand for MCCBs is expected to grow at a compound annual growth rate of more than $2\%$ during the period $20202025($Molded Case Circuit Breaker Market: $2021-26$: Industry share, size, growth, n$.$d$.).$ MCCBs play a vital role in electricity transmission and distribution. The key role of MCCBs is to automatically shut off power when a circuit is susceptible to overload. Some of the major players in the industry include Siemens AG$,$ Schneider Electric, Rockwell Automation, Inc., General Electric, Eaton Corporation Plc$.,$ Mitsubishi Electric Corporation, Hitachi Industrial Equipment Systems, Fuji Electric Co$.,$ Ltd$,$ Eaton Corporation Plc$.,$ Legrand, Toshiba Corporation, ABB Ltd$.,$ and Huayi Electric Co$.,$ Ltd $($Transparency Market Research, n$.$d$.).$The COVID$-19$ pandemic affected business across the world in almost every country. Due to the pandemic, the restrictions imposed on imports and exports affected consumers consumption and demand patterns to a great extent $($Molded Case Circuit Breaker Market: $2021-26$: Industry share, size, growth, n$.$d$.).$The widespread effect of the pandemic has resulted in huge losses to business houses based in China and India. For manufacturers of MCCBs in India, these effects have included raw material unavailability, lack of exports, and changes in demand patterns. Subsequent delays in installations have resulted in increases in the prices of MCCBs $($Molded case circuit breakers market trends analysis$-2030,$ n$.$d$.).$ This phenomenon will prove a major constraint that the industry will have to adapt to$.$ The increase in prices will often result in further delays in projects, leading again to a spike in prices. However, the market is slowly gaining momentum and is expected to continue in the coming years. The projected sales for circuit breakers for the period $2016$ to $2027$ are presented in Figure $1($Fortune Business Insights, $2022).$Figure $1.$ Asia Pacific Circuit Breaker Market, $20162027($USD Billion$)$A bar graph shows a comparison of the Asia Pacific Circuit Breaker Market from $2016$ to $2027.$icon downloadDownload Image as $.$jpgSource: Reprinted from Fortune Business Insights $(2022).$Long DescriptionAbout T&L LtdT&L Ltd is a Mumbai$-$based manufacturing company, and is among the few firms which have the distinction of being awarded the ISO certification for its services as well as manufacturing concerns. It is a technology$-$driven company with leading$-$edge capabilities in fields related to infrastructure and basic industries. It has diversified its business in various fields of the manufacturing sector. T&L Ltd is Indias largest engineering and construction organization. The Mumbai unit manufactures a wide range of products including MCCBs$,$ air circuit breakers $($ACB$),$ switchboards, switches, fuses, motor starters, timers, switch fuses, overload relays, auxiliaries such as contactors push buttons, and indicating lamps. MCCBs make up a large percentage of the companys total product output. T& L Ltd manufactures three variations of MCCBs$,$ mainly differing on the type of application and use. The three types are known as CB$-$K$,$ CB$-$B$,$ and CB$-$W$.$ One unit of CB$-$K requires $30$ hours of production time. The other two models, CB$-$B and CB$-$W$,$ require $40$ and $60$ hours of production time respectively. Due to its well$-$established supply chain, T& L ranks highly among its competitors in terms of market share of MCCBs$.$T&L Production ProcessThe production plant is presently working on a single shift with a capacity equalling $60,000$ hours of labor. The production process comprises eight processes: Release assembly, Assembly process $1,$ Assembly process $2,$ Overtravel testing $($OT$),$ Thermal magnetic calibration, Reset force testing, Millivolt$/$High volt testing, and Packing$/$Finishing$.$ Two suppliers provide raw materials for the release assembly and the housing$/$case assembly $($see Figure $2).$Figure $2.$ Manufacturing Process at T&LAn illustration depicts the various steps involved in the manufacturing process at T and L$.$icon downloadDownload Image as $.$jpgSource: Created by the case authors from company filesLong DescriptionThe value stream comprises two suppliers supplying raw materials. Supplier $1$ supplies raw materials to the release assembly and supplier $2$ supplies the basic housing assembly which is assembled at the Assembly $1$ workstation. The Release assembly workstation makes the release assembly which is transferred to the Assembly $1$ workstation. The housing assembly and release assembly are assembled here. The electrical contacts which form an integral part of the MCCB are assembled at the Assembly $2$ station. The OT testing department tests overtravel between electrical contacts and its contact pressure. The Thermal$/$Magnetic calibration workstation tests and calibrates the MCCBs for overload and short$-$circuit faults. The reset force testing, which is part of the previous workstation, tests the MCCB for the force required to reset it$.$ The internal electrical resistance of the MCCB is tested in terms of milli$-$voltage and high$-$voltage drop at the Millivolt$/$High volt testing workstation. The final packing and finishing of MCCBs are done at the Packing$/$finishing workstation.Departmental MeetingOn April $6,2021$ at $12\mathrm{.}00$ p$.$m$.,$ Sreekanth was accompanied by the Managing Director Manish Tiwari to the board room where all the departmental heads and team members of production planning were eagerly waiting. Among the departmental heads were Koushal, Senior Marketing Manager; Shankar, Production Planning Manager; Chirag Patel, Finance Manager; and Harsh, Human Resources Manager. The agenda of the meeting had already been circulated.Sreekanth: Good afternoon, everyone! I am grateful to our Managing Director for being part of the meeting despite his busy schedule. We have been gathered to discuss how to devise our production planning strategy in view of the effect of the COVID$-19$ pandemic.Manish Tiwari, Managing Director: Yes, Sreekanth, I understand that the pandemic has had a severe impact on any business, but I am a bit surprised, since I have been told by Koushal that we have a great demand for our products.Koushal, Senior Marketing Manager: $[$Raising his voice$]$ Thats right! Our market research team have sufficient data to support there will be a rise in demand.Sreekanth: $[$Suddenly speaking up$]$ I understand there is a demand, but we have to keep in mind our production constraints. Shankar, you can brief the team about our limitations$.$Shankar, Production Planning Engineer: At present our plant works for only one shift; based on the requirements of the marketing team we are not in a position to meet the demand. To add to this we dont have sufficient workforce to address the situation.Koushal: We have to come up with some proactive strategy to meet the market demand. Of course my team can take care of the advertising and marketing campaigns, but I want the production planning team to support us$.$Manish Tiwari: Sreekanth, your inputs? How can we tackle the situation keeping in mind our inherent limitations$?$Sreekanth: Give us a few days. I have to sit with my team and discuss this.Chirag Patel: Let me know the cost implications with respect to the new strategy at the next meeting.Harsh: I request the production team to tell me in advance about the extra workforce if needed for the new plan.Manish: Sreekanth, when can your team come up with a plan?Sreekanth: We will discuss with our team and sent our detailed plan by email to the team.Manish: I hope that Sreekanth and his team will come up with a viable strategy. Good luck!Sreekanth, Shankar, and other team members of the planning department sat across the table for a departmental meeting on April $7,2021.$ The team members were of the opinion that over the last $6$ to $8$ months, there had been a chaotic inflow of orders due to the impact of the COVID$-19$ pandemic. Accounting for some of the chaos is a backlog of old orders that the company was not able to fulfill while shut down for $2$ months.The team members pointed out that there will be a lot of issues concerning scheduling working hours due to variations in demand. Sreekanth emphasized that there are three options:chase Strategy;level Strategy;mixed strategy.The chase strategy is a method of aggregate production planning where the supplydemand mismatch is addressed by $($a$)$ capacity adjustment alternatives: overtime, variable number of shifts, and hire$/$lay$-$off workers; and $($b$)$ capacity augmentation alternatives: subcontracting. The level strategy makes use of the concept of inventory$-$based alternatives and backorders for addressing demand fluctuation without making changes to existing processes $($Mahadevan$,2015$; Russell & Taylor, $2019).$If the chase strategy is chosen, there is an option to work overtime, if the demand is high and more than $60,000$ hours. The production plant can increase the capacity up to $85,000$ hours through overtime, though it includes paying extra using an overtime $($OT$)$ premium. The production plant can also augment its capacity by running an extra shift, in which case the firm can produce for between $60,000$ hours and $130,000$ hours. Both chase strategy approaches present increased labor costs but running an extra shift will not increase the cost as much. Instead of paying an OT premium of INR $20$ per hour, the business is required to pay INR $3$ per hour as a shift allowance. Considering the current situation due to the pandemic, team members felt that it is not feasible go for the subcontracting option as outsourcing work to external manufacturing service providers may lead to reduced profits and longer lead times.After judiciously examining the movement of demand due to the impact of the pandemic, Sreekanth has lately decided to operate the plant on a two$-$shift basis and make use of overtime whenever it is required. T&L would incur a one$-$time cost of INR $100,000$ for the process of transition to two shifts.If the level strategy is adopted the production firm T&L incurs various types of costs. Primarily costs are due to inventory. As the production firm manufactures MCCBs$,$ stocking up inventory will increase the cost. Various components are required for the assembly of MCCBs and the cost of stocking inventory is INR $20$ per hour of average inventory held. The backorder costs are $200\%$ of the unit carrying cost.Whichever strategy is adopted, there is always a cost to changing the level of production. It is a challenge to change the level of production $($both up or down$)$ since it requires making numerous amendments with suppliers and respective other departments of the firm. It calls for reorganizing and rescheduling staffing requirements to fit the adjusted production plan. In the recent past, the planning and costing department worked on the cost required for the change in production level and found out that it would be INR $15$ per hour.Final Production PlanAfter a series of brainstorming sessions, detailed estimates of demand were calculated by Sreekanth Kumar and his team based on the effect of the pandemic and the possible potential demand for the next year. After comprehensive discussions, the possible demand projections for the next year were decided $($Table $1).$ Sreekanth and his planning team analyzed the pattern of demand keeping in mind the effect of the pandemic and arrived at certain observations. It was deduced that the demand for the MCCBs during months $3,4,$ and $12$ were affected by the pandemic and sharply increased during these months. Further, for the MCCB$,$ the cost of stocking inventory is high, hence the quantum of accumulating inventory to meet the high demands was a question that the team needed to address.Table $1.$ Demand projection for the next year $($number of units to be manufactured$)$MonthCB$-$KCB$-$BCB$-$WApril$8391049210$May$9561195239$June$10871358272$July$10151268254$August$9821227245$September$9001124225$October$8151019204$November$767959192$December$8171021204$January$8701088218$February$9271158232$March$10551319264$icon downloadDownload Table as xlsxicon downloadDownload Table as csvicon downloadDownload Table as pdfSource: Created by the case authors from company files.Following a couple of discussions internally, the production planning team came up with two possible options$\mathrm{.}1.$To sustain a steady production level of $85,000$ hours except during high demand periods when they would increase up to $95,000$ hours$\mathrm{.}2.$To sustain the production at the level of the monthly demand, but to increase it to the peak production level of $100,000$ hours during high demand periods to meet demand.The team was not clear about which plan to choose as there were different consequences for each of the options. Though T&L had two suppliers, each was only flexible to respond to changes in production level of up to $8\%($increase or decrease$).$ If there were production changes of more than $8\%($increase or decrease$),$ this would require a formal discussion of T&L representatives with their supplier partners. Any change higher than $8\%$ is often opposed and requires a mutual agreement for finalizing the date for the order.It also requires a longer time frame to react. Keeping in mind the consequences, Sreekanth communicated their plan via email to the managing director and the respective departmental heads. After sending the email, Sreekanth was again going through the email sent by Koushal in which he detailed the publicity program to retain the market share and capture new prospects. The details of the program are as follows:The marketing plan would cost INR $3$ million, and the amount will be spent during months $2$ to $4.$ Due to this campaign the expected surge in sales across all three variants would be: Month $3,8\%$; Month $4,13\%$; Month $5,15\%$; Month $6,11\%$; and Month $7,8\%.$Which option for increasing production capacity to choose? Sreekanth was in a dilemma with respect to the choice he had to make from these two options.Discussion Questions$1.$What is your advice to Sreekanth Kumar concerning production planning for the next year? Which of the two options should he choose? Why?$2.$What are the practical challenges faced by Sreekanth and his planning team while implementing the plan? How should they handle the issues?$3.$What are the consequences of the advertising plan at T&L$?$