Pallas Pharma Cannot Meet Demand
Consulting
easy45 min0 submissionsMorgan Stanley
Scenario
Pallas Pharma (specialty pharma, US) is turning away orders. Demand runs at 2012 units per week, but the plant cannot keep up, and the sales team reports losing deals to competitors on lead time.
Line capacity by stage (units per week):
| Stage | Capacity |
|---|---|
| 1. Intake and preparation | 2495 |
| 2. Primary processing | 1412 |
| 3. Assembly | 2660 |
| 4. Finishing and dispatch | 1769 |
The plant manager has requested $85 M for new finishing equipment, which would add 775 units per week of finishing capacity. He argues the finishing area "is where the queues are visible".
An external contractor has offered to take overflow work at a 30% cost premium over in-house production, available within six weeks.
Supporting data
options
- finishing capex m
- 85
- outsourcing lead time weeks
- 6
- outsourcing cost premium pct
- 30
- finishing capacity added units
- 775
demand units per week2012
stage capacity units per week
- assembly
- 2660
- primary processing
- 1412
- finishing and dispatch
- 1769
- intake and preparation
- 2495
Your task
Advise the operations director. Provide:
- Analysis — where is the real constraint, and what is the plant's actual throughput?
- Risks — of each option under consideration.
- Recommendation — what to do, in what order.
Address the plant manager's capex request directly.
Ready to move forward? Up next: Solstice Travel: Plenty of Demand, Nothing to BuyNext question
How you'll be graded
100 points, 60% to pass.
- recommendation25
- options evaluation20
- bottleneck analysis30
- problem structuring25
Hint
Reveal suggested structure
- Throughput = the capacity of the slowest stage. Identify it.
- Quantify the gap between demand and that constraint.
- Test each option against the constraint — capacity added anywhere else is wasted.
- Cost per unit of added throughput for each option.
- Recognise the constraint moves once the current one is relieved.