Meridian Foods: Orders Are Piling Up

Operations
easy35 min0 submissions
Goldman Sachs
Scenario

Meridian Foods is a packaged foods operation in India. Demand is 1,941 units per day and rising, but the site is not shipping it. Work-in-progress is accumulating and the plant manager is asking for capital.

The line has four stages, each with its own maximum rate:

StageCapacity
Intake2,100 units/day
Processing888 units/day
Quality check1,605 units/day
Dispatch1,528 units/day

Other facts:

  • The plant manager has requested ₹14 Cr to upgrade the Dispatch stage, because that is where the visible backlog sits
  • Each additional unit shipped contributes ₹246
  • Overtime is available at any stage, at a premium

The site director wants to know whether to approve the request.

Supporting data

proposal

cost
14
stage
Dispatch

economics

contribution per unit
246

derived hints

bottleneck stage
Processing
system throughput
888
unmet demand per day
1053
demand units per day1941

stage capacity units per day

intake
2100
dispatch
1528
processing
888
quality check
1605
Your task

Advise the site director. Your answer should provide:

  1. Analysis — what the site's actual throughput is and where the constraint sits, computed.
  2. Risks — what your answer depends on.
  3. Recommendation — where to spend, and the throughput it should buy.

State any assumptions you make.

Ready to move forward? Up next: Basil & Co: Orders Are Piling UpNext question
How you'll be graded

100 points, 60% to pass.

  • root cause25
  • recommendation20
  • problem structuring25
  • quantitative analysis30
Hint
Reveal suggested structure

Stage capacities; theory of constraints; value of relieving the bottleneck; re-check the next constraint