OUTPUT BY:

Guinoo, Jojie Mae

Irog, Ivie
Pasaporte, Reynaldo
Saducas, Abegil
THE COMPANY.

XYZ Ltd. is a manufacturing

company that produces valves.

Been in the business for 3 years with 1 type

of valve.

They have been buying all the raw material

for the valve and were doing all the
manufacturing in house.
 THE PEOPLE.

MR. MOHAN MR. NARESH

Production Head Production Manager

MR. S. KUMAR
Director of Operations
THE MAIN PROBLEM.

MANPOWER
SHORTAGE
OTHER PROBLEMS.

In the recent times, the land prices in the

area have more than doubled in the last 3
years and still land is available with great
difficulty.

The problem of quality complaints which

have gone up from average 0.2 % in previous
2 years to 0.5 % this year.
The workers are regularly complaining about the
over work.

Delay of expansion would cause loss.

QUALITATIVE DATA.

They established their business in the market.

Mr. Mohan has been successful with production

and levels are continuously increasing.
QUANTITATIVE DATA.

Produces only 1 type of valve

Started with sales of 10,000 valves per

month and grew into 50,000 valves per
month.
They have 50,000 area sq. ft. in the main city and
needs another 50,000 sq. ft. if they want to expand.
Overtime cost is 3 times than the regular.

Their economy is growing.

 MANUFACTURING COST. ($)

YEAR 1 2 3 4 5 TOTAL
QUANTITY / YEAR 250,000 400,000 600,000 800,000 900,000 2,950,000
MATERIAL COST / UNIT 14 15.4 16.94 18.634 20.4974
LABOR COST / UNIT 4 3.6 3.6 3.96 4.356
INDIRECT LABOR COST / UNIT 2 1.8 1.8 1.98 2.178

POWER & FUEL COST / UNIT 2 2.2 2.42 2.662 2.9282

VARIABLE COST / UNIT 22 23 24.76 27.236 29.9596

TOTAL VARIABLE COST / YEAR 5 500 000 9 200 00 14 856 00 21 788 800 26 963 640 78 308 440

SUPERVISOR SALARY / YEAR 60 000 66 000 72 600 79 860 87 846 366 306

MACHINE COST / YEAR 1,000,000 1 000 000 1 000 000 1 000 000 1 000 000 5 000 000

TOTAL COST / YEAR 6 650 000 10 266 000 15 928 600 22 868 660 28 051 486 83 674 746
 PURCHASE COST.

YEAR 1 2 3 4 5 TOTAL
QUANTITY / YEAR 250,000 400,000 600,000 800,000 900,000 2,950,000
MATERIAL COST / UNIT 20 20 22 24.2 26.62
TRANSPORT COST 2 2.2 2.4 2.6 2.8
INVENTORY COST 1 1 1.1 1.21 1.331

VARIABLE COST / UNIT 23 23.2 25.5 28.01 30.751

TOTAL COST / YEAR 5 750 000 9 280 000 15 300 000 22 408 000 27 675 900 80 413 900
 DIFFERENCE PER YEAR.

YEAR 1 2 3 4 5 TOTAL
DIFFERENCE 810 000 986 000 628 600 460 660 375 586 3 260 846
THE BETTER OPTION.

XYZ
Company

OUTSOURCE MANUFACTURE
OTHER MATTER.

Build each department.

Cultivate strong coworker relationships.