The Smyrna plant of Dabney Manufacturing Division, was a modern complex devoted to engineering, manufacturing and distributing watt-hour meter equipment. The local labor market is tight; although the plant can get people when necessary, it doesn’t have much of a choice in filling a position. The production time of an order varies from one to eight months, depending on the complexity. The company maintained an 82,500 square-foot warehouse with a capacity for around 418,000 meters.
During the first six months of 1988, DMD-Smyrna added 206 workers due to strong order input for meters; the demand was the largest increase ever experienced at any DMD plant. However, in the fall of 1988, the order rate started to drop off; and in early 1989, the slow selling season started with a large inventory and a large work force. DMD—Smyrna had no layoff in years; a work-force reduction would have a big impact inside the plant and the question of union remained. Moreover, it may not able to hire people back if sales improved in such a tight labor market. This report is going to review and analyze the situation of Smyrna and forecast its future development, including production rate, storage capacity, and employment decision.
The Total Employees forecasted for years 1990-1994 are as shown in the following table.
Total Employees (forecast)
The established hiring trend is obvious (Chart 1), total employees continued to increase in the past 4 years. However, the previous increasing in total employees was due to the continuous expansion of plant and strong demand. In regards to the downturn in sales orders started late 1988 and increasing overhead, Smyrna should not follow this hiring trend and continue to hire more employees based on the trend. Dabney should try to maintain the current labor force so that the plant will not encounter any layoff issues before further information collected. Moreover, the plant will have enough employees if the sales improved in future.
The Table 2 shows the forecasting demand of meter orders in 1989. The highest demand appears in September of 1989 with an amount of 366,077 units; the lowest demand appears in January with an amount of 208,046 units.
Total Meter Orders Forecast (1989)
The data of Total sales of Meters & System for 1986, 87 and 88 are analyzed to forecast total sales for the next 5 years. The results of forecasting in thousands of dollars are as follows (Table 3). Based on the analysis, there is a continuous increase in sales volume (as shown in Chart 2). Therefore, the average incremental in sales from year to year which is also the slope equals to $14,549 (in thousands of dollars).
Since the sales volume continues increasing, Dabney should be able to hire some more employees, but the hiring decision cannot be made until further information collected.
Total Sales (in thousands of dollars)
In order to make sure if Dabney will have a finished goods ware house capacity problem in 1989, a forecast is made using finished goods…