Rajat Aggarwal Shivangi Agarwal Abhilasha Kitty Kanchan Jethwani Komal Makhijani Rahul Verma Kanchan Gupta

Operations started in1996 Madras.  Casual formals and Western wear for children, men and women.  Two manufacturing units in Trichy and Salem.  Big boom in 2002.  Big competitor-Nandhini Silks, Aruna Silks.


Two options: Construction of a large plant to meet the possible demand in future. Construction of a small plant to meet a low demand and expanding it when the demand increased.

Probabilities for low, medium, and high 0.3, 0.4, and 0.3 respectively.

If large plant:
Cost=12L With low demand,0.3,10 With medium demand,0.4,16 With high demand,0.3,24

If small plant:
Only meet low demand, cost=6,prob.=0.3,operating return=10 If expanded to medium demand, cost=3,prob=0.4,operating return=14 If expanded to large demand, cost=5,prob.=0.3, 0.3,operating return=22

High=.3

YES;22-5=17

4 2
SMALL .3*10=3; =>3-6=-3

5
17
NO;.3*10=3; =>3-6=-3 YES;14-3=11

11

1
LARG E

Medium=.4

6
NO;.3*10=3; =>3-6=-3

LOW=>.3*10=3 Medium=>.4*16=6.4

Total=16.6

High=>.3*24=7.2

` `

Construction of a large plant is good. The large plant shows profit.(166000-120000) =460000 The small plant when expanded to meet the future demand gives a net profit of (95000-300000) =650000 Hence we conclude that the general manager should opt for setting of a small plant and then expand it when demand increases in the future.