MGMT 6360 Production and Operations Management

 

Valley Production (VP) manufactures two types of chemicals. One is the Potassium Chloride-Pharmacological grade (KCL-P) and the other is the Potassium Chloride-Technical grade (KCL-T). The accounting department at VP has identified two operating costs units for product manufacture. These costs units are VC and FC units.  The KCL-P requires more VC due to the expensive laboratory testing and sanitary handling requirements to meet medical standards. The KCL-T requires more FC in automated equipment due to the high-volume nature of the industrial chemical market.

 

The CEO has asked you to determine what is the most profitable mix for the two types of products? A breakdown of the cost units and the profits for each product are shown below. Your analysis will include answers to the five questions below and you will recommend a manufacturing location for the two products based on your analysis. Your recommendation will include ALL of the following four items for both products along with your rationale to support your recommendation:
1. Type and amount of labor required 
2. Plant size 
3. Capital investment requirements
4. Infrastructure requirements